When a rich and powerful law firm like Dewey & LeBoeuf collapses, the inevitable post-mortem focuses on the particular events that led to the firm’s downfall. We are told that the firm foolishly guaranteed compensation to its partners, or expanded too rapidly into foreign markets or new practice areas. We are told that the firm’s business model was trampled as a result of the Great Recession or, a decade ago, the dot-com bust.

This search for the immediate causes of a firm’s demise is understandable, even necessary, but it misses the larger point. Wrong-headed decisions can be made — and are made — in any sector of the economy. Macroeconomic conditions can — and periodically will — take a turn for the worse. Despite its prominence and prestige, the legal profession is uniquely ill-equipped to bounce back from adversity, because it is governed by a unique and outmoded regulatory regime that cuts off the flow of capital when it is most needed to help firms expand, thrive or even, in hard times, survive.