In 2012, Dewey & LeBoeuf—a global powerhouse with 1,000+ attorneys—collapsed spectacularly. It serves as a haunting reminder that size and history do not guarantee stability. For a lateral partner, moving to a firm with hidden structural weaknesses isn't just a career risk; it's a threat to your professional reputation and personal capital.

In this episode, Andrew Wilcox—legal recruiter since 2003—pulls back the curtain on the metrics that actually matter. While marketing decks focus on "record growth," you need to look at the diagnostic indicators that separate a healthy institution from one masking a decline.

To assess a firm's health, you must look beyond the top-line revenue. Use these indicators to see the actual efficiency and sustainability of the engine:

• Revenue Per Lawyer (RPL): The most reliable indicator of a firm's "pricing power." A high RPL suggests the firm is handling premium, complex work. A multi-year decline in RPL is a major red flag—it often means a loss of sophisticated clients or a drift toward commodity work.

• Profits Per Equity Partner (PPP): The metric most direct to your wallet. Growth here is healthy; however, be wary of "manufactured" PPP growth achieved by slashing long-term investments (like tech or support staff) or by shrinking the equity pool.

• Leverage Ratio: The ratio of non-equity attorneys to equity partners. High leverage can drive massive profits, but it also increases overhead risk during an economic downturn.

• Revenue Growth (Organic vs. Acquisition): Is the firm growing because its existing clients are spending more, or is it simply "buying" revenue by hiring laterals? Acquisition-driven growth can mask underlying rot in the core practice.

Sometimes the most important data points don't appear on a balance sheet. Watch for these "street-level" signals:

• The "Partner Exodus": When multiple senior partners or practice leaders leave within a short window, it is almost never a coincidence. It signals a loss of confidence in leadership or a pending compensation crisis.

• Delayed Financial Reporting: Healthy firms are transparent with their partners. Late financial statements or vague internal communications often hide liquidity issues or covenant violations with lenders.

• Debt & Unfunded Obligations: Ask about the firm's line of credit. Has it ever been used to fund partner distributions? Does the firm have significant unfunded pension obligations to retired partners?

"You wouldn't invest your personal wealth in a company without reviewing its financials. A lateral move is an investment of your career, your relationships, and your future. Apply the same rigor to a firm’s debt-to-equity ratio as you would to any significant investment." — Andrew Wilcox

If you are currently evaluating an offer and want a "second opinion" on the firm’s public financial data, let’s have a confidential strategy session.

• Email: Andrew@Wilcox-legal.com

• LinkedIn: Connect with Andrew Wilcox