March 4, 2008
Planning Helps Law Firms Weather A Bad Economy
Although the housing market has grabbed headlines recently as the credit issues continue to unravel, the indicators have been present for several years. The businesses who planned for this are now in a better position to adjust and prosper while other businesses close their doors.
Law firms aren't insulated to market downturns. The New York firm Thacher Proffitt & Wood "informed around 50 associates that their futures at the firm were uncertain because of the collapse of the market for mortgage-backed securities, an area where the firm had had a leading practice." New York Lawyer, 11/28/2007. CitiBank and Hildebrandt released a Client Advisory predicting the "perfect storm" of indicators hurting the legal industry.
It doesn't have to be this way. The firm can retain talent even when the marketplace shifts by planning not just for economic good times but for bad times as well. How?
Retain Earnings
Rather than distribute every dollar of profit, project into the future and if indicators suggest that there may be a drop in business in a particular practice area, allocate additional funds to maintain your marketing budget and talent retention.
Prepare for the upswing
Have associates hit the road with partners to build and maintain relationships in the industry. If your client survives the poor economy it will come back stronger. Cement those relationships while mentoring associates so that when the market comes back, your firm has already done the legwork to expand the business.
Transfer Knowledge
Forms are gold, especially in document-driven industries making up transactional practices. Have associates review all firm forms against available case law and take the opportunity to build a solid foundation of accurate and up-to-date forms. Offer an incentive to create "products" representing reproducible work.
Help with the overflow
Just because one industry is hurting that doesn’t mean other areas of the firm aren’t thriving. Give associates an opportunity to absorb work from the more active areas of law. In fact, a firm recently did this when Dechert, LLP, initially layed off 13 associates, then changed its mind and re-assigned them to other practice areas.
Some associates won't have the sufficient motivation to change. That is fine. Keep the ones who do.
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"Planning Helps Law Firms Weather a Bad Economy"…
Posted by Brian J. Ritchey: “Although the housing market has grabbed headlines recently as the credit issues continue to unravel,…