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Perspective

Jul. 26, 2011

Undercapitalization — only a symptom of large firm distress

Undercapitalization isn't to blame for the current financial crisis in large law firms. So what gives? By Edwin B. Reeser


One of the reasons being trotted out as an explanation for the current crisis in large law firm financial condition and performance, and of some law firm failures, has been "undercapitalization." If that were true, then the solution to the present crisis would be a simple capital call from the partners or a line of credit from a bank and everything would be fine with the financial condition of such firms. But there are numerous firms with substantial partner capi...

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