Recession, like in every industry, can be like a hurricane alert for law industry. Everyone scrambles for safety! Most law firms hunker down during the economic slump and prefer to avoid taking risks and never even try to survive. Giving the severity of the risk, avoiding action may be indeed the best plan for many lawyers.
But for some opportunistic law firms, economic turndown is an opportunity to enhance their business. Such doughty firms use some strategies to propel their market position and dramatically increase their profitability.
Do you also want to know what those secret strategies are? Keep reading with us!
Change Your Focal Point
Adverse economic changes can be utilized as an excellent opportunity to change or balance your practice. Firms can invest in counter practices that perform consistently regardless of trading conditions. Hire or train more lawyers in such practice areas that include securities and real estate and merger and acquisition. The shift in focus can also involve a shift in the type of clientele you accept.
For example, if you’re a labor lawyer, you can extend your services to include personal injury lawyer during the recession period. It’s because labors are at the high risk of personal injuries caused by machines.
A British firm, Deloitte UK, shifted its focus from business clients to the public sector when the government was retrenching. The company traded greater economic stability for slightly lower rates by downplaying their declining corporate law practice.
Reconstruct the Staffing Model
Replace your fixed cost model of full-time, office-bound associate and non-equity partners with the variable overhead associates with part-time and telecommunicating lawyers. This way, you can size your workforce and overhead structure to the available work by adjusting the hours provided to part-time lawyers.
This change is an attractive option for the firms where there are more partners than associates. You can also outsource your work under referral agreement to the firms that offer tailored services on demand.
Economic uncertainty can be a great opportunity to create healthy affiliate relationships with attorneys and firms of different practices, both domestically and internationally. Make sure you choose the right affiliation program using these three factors.
First, affiliations must be exclusive, and all parties must agree to do appropriate business with each other. Though this requirement is politically difficult in the booming period, an economic turndown can be a great time for the enforcement of stricter requirements.
Second, do a real due diligence on the affiliating firms. Visit the firm, meet a partner who will work for you and gain confidence in the quality of work they will deliver. In case of international firms, test their understanding of the urgency attached to the work.
Finally, the firm must have well-maintained records of referred work, the amounts billed for that work and the partners involved.
Beat the Weaker Competitors
Recession presents an opportunity for the law firms enjoying competitive advantages. These firms can create a dominant position by effectively putting their competitors out of business. Identify a smaller competitor that has less reputation and is facing a significant loss of clients and partner.
The strategy involves three features:
- Identify the one distinguishing feature that the contending firm cannot replicate easily. It can be a strategically placed office, proprietary computer application or anything.
- Develop a business development program that focuses on face-to-face interaction with the competitor’s clients who would benefit from the identified advantages.
- Get a recruitment program to hire the partners in a competitive firm whose clients have been targeted.
This strategy is frequently used by large firms entering a new marketplace where they’ve been unsuccessful in acquiring a merger partner. It boosts the motivation of clients and partners to leave the firm that is facing the trouble and be a part of the successful one.
While it’s best to be recession-prepared, these tested strategies may help you cope with the economic slump. They may not work for all law firms, and in every economic circumstance, they point out some highly-instructive principles for the firms seeking opportunities in the recession.
Author: Guest Poster
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