Challenges ahead warning road signOne current report signals that the legal services market is suffering from a decline in demand. Reed Smith’s inabilities to keep its full complement of lawyers busy lead it to layoff 45 lawyers recently. According to Peter Zeughauser of the Zeughauser Group, other firms have been stealthily bleeding layoffs here and there for some time. Altman Weil’s 2015 Law Firms in Transition Survey has noted the trend while also identifying some of the reasons.

Some additional research supports the view that law firm leaders don’t view softness as a temporary blip. An analysis from Citi Private Bank says that confidence among many managing partners is the lowest since 2012. In this time of declining demand, keeping your law firm stable is imperative.

Managing stability at a law firm when lawyers are begging for work is easier said than done. For any firm experiencing a drop in production, the managing partner’s toolbox contains a number of action steps. Yet not every one of the steps will necessarily fit nicely in every case. Indeed, some “best practices” employed by some firms will be the wrong choice for another firm. With that in mind, leadership seeking to improve a firm’s stability in a time of softness should consider the following:

Understand the Decline and Understand Your Firm.  Despite the numerous press reports about lessening demand for legal services, law firm leadership should delve into the reasons for the decline it is experiencing and not let press reports about the industry or other firms dictate its response. A thorough understanding of a particular firm’s situation is essential to designing an appropriate response or determining if one is even needed. Also understanding the firm’s ability to “circle the wagons” in order to ride through the downturn is crucial. A firm with a “lock arms” culture can endure slowness much better than one with lawyers continually espousing a “me” philosophy.

Consider Layoffs But Do So Thoughtfully.         If the analysis indicates that excess capacity is not a short-term issue but has a long horizon, layoffs sooner rather than later can often help a firm get ahead of softness and preserve capacity for the firm’s keepers. That said, well-managed layoffs involve the art of cutting fat but not muscle. Before layoffs are executed, consider the firm’s strategic plan. Ask whether the proposed layoffs cut into muscle and undermine the strategic plan long held dear.

Work on the Top Line. Initially, it might seem silly to dedicate extensive time trying to improve the top line as a solution for reduced hours. But in many cases softness has followed a period of robust matter intake that spawned complacency in the prior business generation effort. Take stock of relationships and mine them for all they are worth. Top line improvement can be successful through methodically attending to mining the relationships that exist, even if they have grown a little stale.

Let Your Clients Know That You Are Listening.           Reduced client demand can be traced, in part; to clients’ need to roll back their legal spend or reduced activity in the deal market. Hustling those clients for work as if everyone is still enjoying good times is being tone deaf. Creatively addressing clients’ aversion to legal spending shows the clients that you are listening and responding. It may mean you eke out additional work under alternative fee arrangements, but it improves utilization and every little bit helps. Besides possibly keeping some people busy, and it also may preserve or strengthen the client relationship.

Protect Your Flanks. Lawyers get nervous when things are slow, including the lawyers that have the least reason to be anxious. Don’t be sanguine because some lawyers happen to be busy. It is the busy ones that may bolt when least expected. Give the stars lots of attention.

Stability in a law firm is always better when morale is good. When times get slow, morale tends to dip and things can get wobbly. Addressing slowness is the key to maintaining stability. If your firm is getting slow, what steps are you using to combat instability?