The days of multi-million dollar profits per partner and rapidly rising triple-digit associate salaries were never real for most law firms, especially when considered in light of the demographic of law – more than 70% are in small law firms. But, now firms big and small, conservative and highly leveraged, all feel the business pressure from the economic downturn.
In today’s economic “perfect storm,” finance, transactional, and litigation work have turned down simultaneously for many firms, with few offsetting increases elsewhere. It may be hard to know where to turn under such circumstances. A practical strategy is to look no further than your own firm or practice, focusing your perspective through three distinct lenses.
Look to the past, collect overdue accounts. Review your accounts receivable weekly and determine which clients are behind on their payments. Forgetting or ignoring these clients means failure to collect your money. Thank those who have paid, remind those who are behind. Above all, don’t let collections slip. Studies show that a bill that is over 60 days past due can still be collected about 89% of the time. However, that drops to a 67% likelihood of collection after six months, and to a 45% likelihood after one year. By then, you may be out of business.
Look to the present, scrutinize overhead. Investment and staffing plans made in better times may simply not be feasible in a recession. While you may not be able to alter decisions of the past, consider postponing any major new investments. Look hard at your space needs and lease terms and consider more affordable options. Don’t eliminate valuable lawyers and staff who you’ll need with business inevitably picks up; reassign them new areas that are generating work, or have the potential to do so.
Look to the future, get out and market. When you fret about how bad business is, hours become days and it’s easy to get into a funk. Break out, and look for clients where they are. Go to a bar association meeting, do blogging, call up past colleagues and clients, write for publications. None of these steps require expensive advertising or brochures. They do require effort, though. Marketing is every activity throughout the day that communicates what you can do for people who potentially need your services. Start today and the future will take care of itself.