The first thing lawyers should do in a recession
I was not planning to write about the economy this week. But then I saw Business Week’s special report on the current “market reckoning” (February 4, 2008 issue, p, 26). It explains how “We’re at the beginning of a long arduous process of figuring out how much of the post-tech bubble prosperity was real, and how much was the result of a credit induced frenzy.” The article says that American spending has exceeded earnings by about $3 trillion since 2001, and quotes a variety of expert opinions on just how bad things may get as a result. All seem to agree that at an absolute minimum there will be some sort of painful correction.
Now nobody likes to hear bad news and it’s human nature to ignore warning signs, so maybe you think it’s way too early to consider the implications of a legal recession. If that’s your view, see the 2008 annual Client Advisory issued by Hildebrandt and Citi Private Bank on Monday, which they described (p. 18) as "Our first ‘downbeat’ Client Advisory since we predicted the economic slowdown of 1998." They concluded (p. 10): "It would be prudent for leaders and managers of law firms to assume that the current economic slowdown is likely to have a detrimental impact throughout 2008."
You want more evidence? See:
- Last week’s online article from Larry Bodine entitled “The Legal Profession Has Entered a Recession.”
- Lawyer Pat Lamb’s post “Will the perfect storm fundamentally alter the foundation of the profession?”
- Gerry Riskin’s August post: “Doom and gloom for the legal profession: It’s coming.”
- Gerry’s follow-up post last week for managing partners, entitled “Recession-proof your law firm.”
Of course, some lawyers won’t believe any of this bad news until they begin to see their own billable hours get squeezed. When they do, the first reaction of some will be to suddenly start looking for new clients. Wrong answer. They should start by protecting the clients they already have and start doing it now. Your clients will be feeling pressures of their own, and your competitors will be coming after them.
So that is the first thing every lawyer should do in a recession: protect your work with current clients.
And how do you do that? Consider what other firms are doing, quickly pick out an item or two that fits your practice and personality, and give it a try. Here are five of the best steps to increase client satisfaction:
- Schedule a free visit to a client’s office, to discuss the client’s business needs, or free monthly meetings or telecons "off the clock."
- Conduct a formal or informal client satisfaction interview.
- Ask the client what needs to be improved—responsiveness, timeliness, and/or value—and brainstorm together about how to accomplish this
- Improve communication about the business implications of legal matters.
- Promote efficiencies to reduce cost, and tell clients about them.
Do you think this is unnecessary? Are your clients already completely satisfied with the service you provide? Are you sure? In a 2007 survey of general counsel, Inside Counsel magazine asked lawyers to grade their overall performance with clients as A, B, C, D, or F. 62% of the lawyers thought they were earning an A. But when they asked clients the same question, in fact only 19% earned As. In other words, more than 2 out of every 3 lawyers overrated their performance.
So even if you think your current clients are happy enough, it would be wise to make them happier.
Once that is taken care of, then budget some time looking for new clients. Start by accepting the fact that it takes a long time to develop relationships. As my first sales coach said to me many years ago, “You can’t make the corn grow faster because you are hungry.” But the journey of a thousand miles does not begin until you take that first step, so it might as well be today.
And if you get tempted to cut back on marketing when times get tough, consider Hildebrandt's conclusions (Client Advisory, p. 13): "The competition to win and keep clients is intensifying notwithstanding the downturn, and firms would be well advised not to be ‘penny wise and pound foolish' in this area."