Law firms are incredibly short-term oriented. In the US, we can in part blame the tax code that causes firms to view everything on a cash in-cash out basis. But that cannot be the whole problem, because law firms in Canada and Europe tend to be just as short-sighted, and they are (at present) taxed on the accrual basis.
In part, a short-term viewpoint may be a function of the revolving partnership door at many firms. The people participating in this year’s profits may be a different group than will participate in next year’s, so current year profits are the primary focus of everyone’s attention. Perhaps it is systemic to businesses in general, brought on by the way that corporate shareholders seem to focus on current dividends and stock prices rather than long-term positioning.
