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The dissolution of a law firm causes its leaders to be pulled in conflicting directions. Peter Zeughauser reports on the main responsibilities of a managing partner in a downturn

The role of every managing partner changes as his firm grows and evolves, but his focus is always on building a sustainable enterprise – except when the firm’s future clearly becomes unsustainable. The notion of a firm’s failure can be so disturbing that it escapes planning until the 11th hour.

As is the case with all unanticipated events, though, the conflicting interests that arise in a firm’s failure are best managed with careful forethought.

In every firm failure there is a window – sometimes called the ‘death spiral’ – between the moment when a law firm leader realises that the firm will likely not survive and the moment the firm votes to dissolve.

During this window, the managing partner’s role is fraught with conflicting interests. Commonly without a book of business, the law firm leader has his own future to worry about. Unlike the chief executive of a failing company who can often find work as a CEO elsewhere, chairmen who preside over the demise of their firms seldom find work as the head of another law firm.

Also, the leader has a duty to disclose the firm’s underlying weaknesses to his partners, but he is also responsible for maintaining the lustre of the firm’s brand, which can make a big difference in the employment prospects of lawyers and support staff far into the future.

How the chair manages the firm during this window greatly affects the likelihood of a smooth transition. Here are four critical responsibilities.

Develop a plan

The chairman must lead the decision-making process during the death spiral. Topics to be addressed include:

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