Small Firms Go Out of Business Easily???

[hiccup]

Well, I guess it's

"Smaller is Better" v. "The Bigger, The Better"

[newmommie]

lol hicc!

[da]

I think what matters is how much debt the firm is carrying. Even large firms take out huge loans and then can't pay it back. I think that it would be more likely, however, for a small firm to be unable to pay back a loan.

Maybe you wanted to say how much debt the person hired by the firm is carrying??

[jacy85]

No, that's not what she wanted to say.  Starting a business takes a lot of overhead.  A small firm with, say, 10 attorneys needs office space for those 10 attorneys, plus 3 secretaries, maybe a couple paralegals, add into that office furniture, computers, software, supplies, a law library (either an online service, or a more traditional set), stationary, advertising, any taxes or fees that may accompany starting a business, salaries and benefits for employees...the list goes on and on, and it adds up quickly.

Even if you cut the number of attorneys down to 2 or 3, it can still be a substantial cost.

[giraffe205]

Repaying the firm's debt service affects the firm's profitability, and thus, whether they will continue doing business. Some firms, like Snell & Wilmer refuse to take out any loans. So when it comes to cutting costs, labor is one area that gets slashed. Some large firms do, however, take out loans. Sometimes they'll take out loans just so that they can pay back part of the other loans. Medium-sized firms are known to take out a loan when they just know that they have that multi-million dollar case but can't afford to pay the experts and labor costs. So they'll take out a loan b/c if they do settle or win, they'll be able to pay back the loan.

The point is that many firms take out loans--be it big, medium, or small. What matters is if they can pay it back. Sure as an atty, you're happy as long as you get your salary. But as you are looking to become a partner, paying back a large debt service cuts into your profitability.

[imago]

I think what matters is how much debt the firm is carrying. Even large firms take out huge loans and then can't pay it back. I think that it would be more likely, however, for a small firm to be unable to pay back a loan.

Imagine now individuals, like young lawyers fresh out of law school, paying back their loans -- when firms can't honor sometimes their signatures, is it stange that persons can't?!

[shouldormust]

lol imago!