According to a recent article on Law360, lapsing leases play an “oversized role” in law firm mergers and dissolutions, particularly at smaller law firms. The article notes that
Over the last five years or so, legal industry experts have increasingly pointed to a lack of formal succession planning as a risk to many partnerships, particularly those spearheaded by baby boomer lawyers entering retirement years.
Smaller firms that have not made adequate plans for succession are likely to face difficulties surviving in their current form as lease terms reach their end.
As baby boomers reach retirement age, they have less desire to take on the risk of extending a lease. If there are not enough younger partners or attorneys available or willing to shoulder the burden of an extended lease term, then the perceived economic risks by both senior and junior attorneys may cause a firm to disband or merge rather than renew or extend a lease.
We are probably entering a period where we will see many long-established and well-respected firms begin to disappear. That will be a loss for the legal profession, but also an opportunity for the next generation.