Originally published on August 31, 2009 in our free SmallLaw newsletter.
"May you live in interesting times." Thanks Confucius, we now get it. As we approach a full year of living in a tanked economy, the old rules no longer seem to apply to this new legal world. The ABA Journal recently reported that 39% of 14,000 lawyers polled said they expected layoffs at their firm in 2009. Nearly 20% of the respondents expected to lose their own job. Welcome to the new normal.
How Good Lawyers Survive Bad Times
After decades of lawyers calling the shots, everything has changed. But not necessarily for the worse. Open-minded small law firms that welcome change and equate "challenges" with "opportunities" may experience a renaissance of sorts provided they know the answer to this question: How can good lawyers survive bad times?
Hot off the press, the ABA Law Practice Management Section's new book, How Good Lawyers Survive Bad Times, is here to help. Co-authored by yours truly, along with noted legal technology and law practice management sages, Sharon Nelson and Jim Calloway, the book offers immediately usable and practical tips to help lawyers not just survive, but thrive by leveraging street smarts, positive thinking, decisive action, and creative solutions.
How Good Lawyers Survive Bad Times consists of three parts: (1) how to keep your job, find a new one, or start your own firm; (2) how to manage and market your firm in a down economy, and (3) how to practice more efficiently with the help of technology. Below you'll find five excerpts.*
Practice and Financial Management
It's Your Money — Watch for Trouble
Reviewing your internal financial reports regularly is an important part of maintaining the firm's profitability in tough economic times. Monthly reviews of your financial reports may no longer be sufficient. Many firms will be well advised to switch to either weekly or bi-weekly review. You would never allow a client to operate a business without checking their inventory, bank balances and financial statements very regularly. Why would your law firm have any lesser standard?
Renegotiate Everything
We can't stress enough — renegotiate your current contracts. You might be amazed at how eager they are to keep your business. This has worked with credit card companies, security services, telephone providers, furniture stores, and the list goes on and on. There is never any harm in asking. Take a look at the major vendors you're paying on a regular basis. Many of them are well aware that you are now doing comparison shopping and will offer a reduction in rates. Some will be willing to change payment terms to allow you, say, 60 days to pay balances rather than 30. Shave the overhead by negotiating aggressively with vendors.
Business Development and Marketing
Thinking Innovatively Is the Key to Surviving a Bad Economy
Can you create more value for clients? Is alternative billing a partial solution? Can you you, at this time, appeal to different clients? Should you firm structure be changed to deal with economy? What can you do with your overhead? Can you merge for strength? Should you break away from a weak firm? As a solo? As a group? Can you find a global market? Can you practice in another area of law? Do you need to change how you market? The questions are endless — and the answers are not pat — they will vary from lawyer to lawyer. Take some quiet, meditative time to think this through. In our busy lives (well, perhaps somewhat less busy for some these days), it is difficult to think amid the phones, faxes, emails, etc.
Technology in Law Practice
Smart Technology Can Positively Shift the Time Bucket
A basic premise to consider when making any technology expense — whether for a replacement computer, a new laser printer, a shiny new smartphone or a practice management system — should always be whether it positively shifts the "time bucket." What is a time bucket? Simply put, regardless of whether a firm tends to bill by the hour, bills flat fees, does contingent billing, does some other kind of project/"not to exceed" kind of billing, there are only so many potential billable hours in any given day.
Spending Money in a Tight Economy May Seem Irrational at First
The challenge is overcoming the inertia of human nature. When times are tough and discretionary business cash is tight as a drum, who spends money on new technology? Don't those funds go to satisfy more primal needs like wages and rent? This is where lawyers who are both courageous and smart will hold back their instinctive "bunker mentality" and apply the "time bucket" analysis. If the projected return on the technology expense will positively shift the bucket to a higher percentage of billable time, exceeding in a predictable, calculable period of time, the cost of the technology, the expenditure not only makes sense, but is economically necessary. The converse also being true, a purchase that would negatively shift the time bucket should be avoided.
Let Us Know What You Think
These excerpts merely scratch the surface of what you'll find in the 230 pages of How Good Lawyers Survive Bad Times. Priced at $47.95 for Law Practice Management Section members ($79.95 otherwise), my co-authors and I believe you will find it a worthwhile investment. If you read the book, please let us know what you think.
* Excerpts Copyright 2009 ABA Law Practice Management Section, Sharon Nelson, Jim Calloway, and Ross Kodner. All Rights Reserved.
Written by Ross Kodner of MicroLaw.
How to Receive SmallLaw
Small firm, big dreams. Published first via email newsletter and later here on our blog, SmallLaw provides you with a mix of practical advice that you can use today, and insight about what it will take for small law firms like yours to thrive in the future. The SmallLaw newsletter is free so don't miss the next issue. Please subscribe now.
