Law firms don’t just go bankrupt—they collapse. Why? Drawing on a review of every large law firm collapse in the past 30 years, the author argues that the answer lies in the unusual way that law firms are owned. Unlike Amazon and Chrysler, law firms tend to be owned by their partners rather than by investors. And this makes the partners unusually sensitive to decline. As a firm’s profits drop, the decline can feed on itself and turn into a self-reinforcing spiral of partner withdrawals.

Why Law Firms Collapse