Many or even most law firms are coming off their best year ever. It may be a time to celebrate, but I continue to think about the inevitable bursting of the bubble. Yesterday I was catching up on some long-overdue reading and came across this Forbes article by Mark Cohen. The Cohen article is excellent and makes a case that the next economic downturn is likely to be very disruptive for many law firms. A falling economy will undoubtedly result in a decrease in demand for legal services, and most law firms are ill prepared.
Rational professionals all agree that a downturn is coming, the unknown is when we will see it. There are two fundamental approaches, prepare now or wait and see what happens. I am reminded of the fact that:
- Many people first join a gym, stop smoking or start eating better right after their first heart attack,
- Others, buy new tires after a flat on the expressway,
- Couples often agree to counseling after a divorce filing and
- Too many law firm leaders begin taking corrective action once their firm begins experiencing the loss of key lawyers or clients.
Prudent leaders recognize that now is the time to start getting lean. As most know, the two drivers of law firm financial cost management are people and space. The current market is strong for addressing an excess of both of these today; it won’t always be so.
Forward-looking law firm leaders are focused today on preparing their firms for tomorrow. Is yours?