| Recent catastrophic events in the United States add to the challenge facing law firms in much of the western world. An existing soft economy will be further impacted by the terrorist attack on the U.S. Law firms with effective management will continue to prosper. Firms lacking enlightened management will continue to be vulnerable to the plight that a down economy already presents.
A soft economy represents good news, bad news, and a major window of opportunity for law firms. How one interprets the news depends on the diversity of both the firm's client base and practice specialties. How one interprets the window of opportunity depends on the management acumen - or lack of - among the firm's senior management.
A weakening economy stimulates new work for bankruptcy, recoveries work, restructuring, certain corporate work, and litigation, among others. Venture capital, high-technology, and incubators are among those who normally suffer the most during a soft economy. The window of opportunity that a soft economy presents is this: Now is the time for law firm management to take a hard look at its business development culture - the attitude of the firm's lawyers and the client development action they take - and to do something to make it better.
Diversity of clientele
During the best of times, let alone in a tight economy, one of the major goals for firm management is to keep the staffing levels in line with the current and the anticipated work level. Diversity of practice specialties is, therefore, another important factor during a down economy. Diversity means the flexibility - the capacity for certain lawyers to effectively move from one practice specialty to a practice area with ample work.. Litigation and corporate finance lawyers can move into bankruptcy, restructuring, and creditors rights work. Management needs to assist those lawyers to acquire skills and encourage their movement into the more prospering practice areas.
Some firms conduct stricter performance reviews during lean tines as a mean of managing staffing levels. With corporate work declining, the firm conducted a round of performance-related associate lawyer terminations. To further thin its ranks of associates without making cuts, the firm has offered a $3,000 per-month stipend to associates who are willing to find public-service jobs outside the firm for the next year. Other steps the firm has taken to adjust to the soft economy include terminating its annual retreat, saving the firm some $400,000. With fewer bodies, the firm has leased out excess space; reduced headhunter fees, and trimmed the summer program.
Window of opportunity
A down economy can be a wake up call for firm management to look hard at its business generation culture. Firms can be slumbered to sleep during a robust economy. Cries from lawyers, "I'm too busy to market"; or "We have more business than we can handle" are no longer heard in depressed practice areas. Astute management does not wait for the economy to push them to examine their business generation priorities. The following four initiatives are among the highest-and-best use of partner and senior associate level time during good times and should be accelerated during the bad times:
- Maximize the relationship with existing clients through 90-minute face-to-face client reviews conducted by senior partners who are neutral to the client relationship; and communicate the results of those reviews to all who service the client;
- Put into place service strategies designed to achieve the following: a.) keep the work you have; b.) increase the clients' level of satisfaction with work product and service delivery; c.) determine realistic opportunities for additional work within both current service areas and areas of need not currently serviced by firm lawyers; d.) hold client partners accountable for growing the relationship with the client; and e.) select lawyers who are committed to investing in client relationships to be part of the team to service top clients and to service newly acquired clients that have substantial growth potential; f.) educate the client about the service capabilities of the firm.
- Reduce the time and money invested in certain traditional marketing "feel good" activities - seminars in which no one follows up with delegates; article writing in practice areas that have little chance of generating new business; the production of glossy type-set brochures - with focused and achievable 12-month marketing plans - either practice group and/or individual lawyer - for which the lawyers will be held accountable.
- Have within the firm a critical mass of partners and senior level associates who are trained to develop qualified targeted prospects, and to follow-through so as to guard against the pitfalls of a sour economy.
Paradoxically, a soft economy may motivate firms to ensure that clients and the practice base are better managed, and to stimulate behavior that ensures the future success of the firm. |
