| The forecast is foreboding – recession ahead – | | | | the face of a recession. That can be a mistake, |
| and everyone is scrambling for safety. But what does | | | | Bower warns, because they may be missing |
| is mean for the legal profession? | | | | opportunities presented by the recession to expand |
| Some experts believe the legal profession is | | | | through lateral hires and mergers. "Firms that are |
| recession-proof; in good times and bad, there is always | | | | adequately capitalized can find recession to be a |
| a need for lawyers. But others say the demand for | | | | growth opportunity." |
| legal services is already declining and could drop even | | | | Also important is for law firms to be flexible in their |
| lower in a recession. | | | | staffing, advises Jordak. "Firms need to have the |
| Most agree, however, that law firms have learned | | | | flexibility to assign associates from an area that's |
| from the errors of the past and are now better | | | | down to a more active area." |
| equipped than ever before to handle an economic | | | | Others suggest trimming may be in order. "Look extra |
| downturn. | | | | hard at the quality of your lawyers," recommends |
| "The legal industry is more recession proof than most," | | | | Donald A. Loft, a partner with Morris, Manning & Martin |
| says Peter Zeughauser, founder of management | | | | in Atlanta. "Get lean and market the firm harder. |
| consulting firm Zeughauser Group. "Clients will have | | | | Incentivize your good marketers to get out there." |
| legal needs in down times and have legal needs in up | | | | Citi's DiPietro is even blunter: "Firms are recession |
| times – they may be different needs, but they'll | | | | resistant, not recession proof. This is an opportunity to |
| have them. As a service business, the legal industry is | | | | shed unproductive lawyers via rigorous performance |
| generally recession proof." | | | | reviews." |
| Practice areas likely to remain healthy even in a | | | | LISTEN TO YOUR CLIENTS |
| recession are litigation, intellectual property, restructuring | | | | No matter what happens, don't forget your clients, |
| and bankruptcy, Zeughauser says. Those likely to slow | | | | several practitioners urge. |
| are transactional areas such as mergers and | | | | "One thing that's important is for attorneys to really |
| acquisitions and private equity work. | | | | listen to their clients and try to be ahead of the |
| Zeughauser's perspective is one shared by many – | | | | particular concerns in their sector of the economy," |
| litigation will remain strong while major transactions will | | | | says Jordak. "By doing that, you can better position |
| taper. But a just-released report concludes that a | | | | yourself to help your clients work through their |
| confluence of economic factors could challenge that | | | | recession woes." |
| conventional wisdom. | | | | Donald Loft agrees, "Get more creative with your fee |
| The January 2008 Client Advisory jointly issued by | | | | arrangements. Put extra emphasis on efficiency and |
| Hildebrandt International and Citi Private Bank finds that | | | | service. It is a privilege to represent your clients, not |
| the current economic downturn is hurting the legal | | | | vice versa; act like a business partner and be sensitive |
| industry across all practice areas. | | | | to their needs." |
| "In a sense, the current downturn has thus far been a | | | | While larger firms that are diverse in their practice |
| 'perfect storm' in which finance, transactional, and | | | | areas and geography may have the upper hand in |
| litigation work have all trended downward at the same | | | | weathering a recession, smaller firms have an |
| time, with no offsetting surge in work related to the | | | | advantage in their flexibility. |
| economic downturn itself," the advisory cautions. | | | | "Smaller firms with flexibility may pick up some clients," |
| Still, that downward trend is likely to turn up as the | | | | says Loft. "I would expect corporations to shop |
| recession deepens, at least for litigation, says one of | | | | around. I would expect rate increases to slow down |
| the advisory's authors, Danilo S. DiPietro, head of the | | | | and increased demand for fixed price services." |
| Law Firm Group at Citi Private Bank in New York. | | | | If all this makes you nervous, you are not alone. "Every |
| "There is already some evidence that high end litigation | | | | law firm is always nervous about its work and its |
| and investigatory work are picking up." | | | | clients," observes Zeughauser. "Normal anxiety is |
| The reason litigation remains strong during a recession | | | | heightened at a time like this. There are few firms that |
| is no surprise. Even when the economy is down, | | | | don't worry about losing work." |
| companies still want to sue each other, notes John A. | | | | But even if there are storm clouds approaching, there |
| Jordak Jr., a partner with Alston & Bird in Atlanta. "In | | | | may be a silver lining within them. |
| fact, companies might be more inclined to sue if the | | | | "The legal profession is extremely resilient, and the |
| economy is down." | | | | demand for legal services will undoubtedly continue to |
| In his focus area of securities litigation, that also holds | | | | grow, albeit perhaps at a somewhat slower pace," |
| true, Jordak says. "Class actions are filed typically | | | | says the Hildebrant/Citi Client Advisory. "But, with |
| when the stock price of a company takes a nose | | | | careful and sensitive management and with particular |
| dive. If the market is jumpy, you'll have more of those | | | | attention to 'people issues,' we believe that most firms |
| cases filed. So a recession can often mean an up tick | | | | will experience a relatively good year, even if overall |
| in our work." | | | | annual revenue and profit growth is less than in the |
| FIRMS BETTER PREPARED | | | | immediate past." |
| Industry observers agree that most large law firms | | | | For Donald Loft, challenging times offer opportunity. |
| learned valuable lessons from the economic downturn | | | | "When times get tough, that's when you have to use it |
| a decade ago and are better prepared than ever to | | | | as an opportunity to examine how you can compete |
| weather any approaching economic storm. | | | | more effectively. If you do that, it will serve you well |
| Ward Bower, principal of legal consulting firm Altman | | | | not just in hard times, but when things turn around as |
| Weil Inc., suggests that the key to being prepared is for | | | | well." |
| a firm to diversify into countercyclical practice areas | | | | This article was originally published in BullsEye, a |
| and to be prepared to downsize where necessary. | | | | newsletter distributed by IMS ExpertServices™. IMS |
| Also, firms should cross-train lawyers in areas such as | | | | Expert Services is the premier expert witness search |
| corporate law and real estate to handle matters on | | | | firm in the legal industry, focused exclusively on |
| both sides of the cycle. | | | | providing custom expert witness searches to |
| Jordak believes this is why larger firms such as his are | | | | attorneys. To read this and other legal industry |
| better able to withstand the vagaries of the economy. | | | | BullsEye publications, please visit IMS Expert Services' |
| "For a firm such as Alston with a broad base, if one | | | | recent articles. For your next expert witness search, |
| area is down, others go up, so it equals out over time." | | | | call us at 877-838-8464 or visit our website. |
| Even so, some firms are tempted to hunker down in | | | | |