Kristin Gamble
Economics
of Law Practice Seminar, Fall 2001[1]
THE
EFFECTS OF AN ECONOMIC DOWNTURN ON LAW FIRMS
PERSONAL
EXPERIENCE
As an undergraduate, I attended the
College of Business with an emphasis in economics. I learned that a recession effects all types of businesses;
producers and consumers alike. The
economy’s business cycle has inevitable highs and lows arising from a variety
of causes. These include politics,
price competition, government spending, foreign economies, and implementation
of laws and operations of the Federal Reserve.
As a proud member of our capitalist community, in 1998, I decided to do
some investing. Using some money that I
had in mutual funds I invested in three different companies that I hoped would
increase in. The market was profitable
through 1999. One stock in particular
went up from $50.50 per share to $80.00 per share within a few months. However, as the business cycle indicates,
whatever rises must also fall. Today,
that stock is worth about $6.50 per share.
It has become apparent me that our economy has begun to recede.
The legal profession is one that provides a necessary service to our nation’s individual and corporate consumers. Yet, the profession is no exception when it comes to a failing economy. As an aspiring attorney, it is necessary to understand how law firms manage their practice and whether or not they are equipped to handle economic highs and lows. Recessions effect firms in a variety of ways. This paper considers the essential elements of successful firm management of both large and small law firms. In addition, it examines some of the ways that firms can prepare for an economic recession. Small law firms, especially, can embrace this period of an economic slump as a way to gain a competitive edge over larger firms.
FIRM DISSOLUTION
Some law firms make
the mistake, as I did, of being too optimistic in the seemingly unending time
of economic prosperity. When times are
prosperous, as they were during the Clinton era, there is no inclination to
prepare for the hardship of an economic downturn. During the beginning of the millennium, a Texas Bar Journal
author noted, “Many law firms (large and small) still have a tendency,
especially during good times, to become complacent and assume that maintaining
the status quo is a sound business strategy. However, this strategy will not
work in the modern business world.”[2] Firms must consider, as they were forced to
understand in the past, that an economy will not grow forever. “The legal industry experienced major
economic downturns during 1971-72, 1982-83, and 1990-91. As a result of these
slowdowns combined with too much debt, many large and small firms failed.”[3] When firms, and particularly large ones
fail, there may be both financial an emotional results. Not only are the attorneys uprooted, but so
also are many staff members who may not find easily find reemployment. In addition, business projects are
interrupted and some cancelled.
Litigation may be delayed or dismissed, and often those most severely
affected are the firm’s clients who must seek new counsel to pick up the
pieces, a result that is often both inconvenient and expensive.
There are several
factors that affect law firms during an economic downturn. One well-known firm in Des Moines, Iowa,[4]
painfully realized during and after the 1990-91 recession, that these factors
can ultimately lead to the dissolution of the firm. The firm began to experience some of the problems that occur for
all kinds of businesses during a recession.
As with most businesses and service providers during poor economic times
the firm began to notice a reduction in
demand for services. The firm’s
difficulties were made worse by eroding personal relationships among the
members In addition, the firm incurred significant losses because of an
overemphasis on contingent fee cases. The downward spiral resulted in the
firm’s inability to control overhead as
a percentage of gross costs, and disagreement about the distribution of
profit. During the same period, clients
were lost due to older partners deciding to retire, stronger, more capable
competition, and a change in firm specialties.
The various
disagreements regarding management included voting rights, control over staff,
hiring practices, contingent fee cases, partnership track and overall
management style. The firm could not
agree on having a democracy or some form of centralized control. As the downward spiral continued, there were
also elements of mistrust among partners regarding financial matters, client relations, retention of staff, and small groups of partners acting in their own
interest. This unfortunate cycle of events was painful and ultimately led to
the dissolution of the firm.
There
were lasting financial consequences following the dissolution of the firm. There was little business produced prior to
the dissolution, but the firm’s expenses remained. Accounts receivable became difficult to collect after the
dissolution. The firm was forced to
liquidate its equipment, furniture, and library at a fraction of cost. The firm also had continuing overhead costs,
including rent, software contracts, equipment leases, utilities, and salaries
for management and bookkeeping.
Tension among the
attorneys and also between the attorneys and members of the staff resulted in
the loss of long term friendships.
Tension also grew between clients and the firm’s attorneys due to work delayed. Some long term clients found other counsel
due to the firm’s inability to continue work that it was previously able to
provide. An additional concern for the
firm’s attorneys following the dissolution was the potential for liability for
prior acts. Insurance to cover that
potential was expensive and added to the cost of the dissolution. Although all of the firm’s members and staff
found employment, the financial and emotional cost of the dissolution may never
be completely measured.
An economic
recession can spark a chain of events that can lead to the failure of a law
firm. We are now in the midst of and
economic downturn and firms must consider what is necessary to ensure their
survival. Without proper knowledge of
the change in demand for legal services and strong internal management, law
firms might experience the same struggle and ultimate failure as did this firm
resulting at least in part, from the recession of 1991.
DEMAND OF LEGAL SERVICES
As a result of an
economic downturn, consumer spending will drop as will production, and the
ability to spend money on elastic goods and services will decrease.[5] In some cases, law services are elastic
meaning that as disposable income decreases, the demand for certain forms of
legal service decreases as well. During recessions, there
is a reduction in demand for discretionary legal services such as minor tort
litigation, planning estates, drafting wills, and handling real estate
transactions. Corporations are also less inclined to initiate litigation when
poor sales and profits lead to monetary tightening.
Consumers
and businesses with little money to spend,
are unlikely to seek attorneys to litigate claims unless they have a
substantial loss and a good chance to prevail and collect damages or they are
required to defend against claims that may have serious adverse results.
However, there are
other areas of law that are inelastic meaning that the service is necessary no
matter what the cost.[6] An example of this is criminal defense. Everyone accused of a crime is going to need
a lawyer and their income status is not going to change the necessity of a
defense attorney. It is necessary for
all types of firms to evaluate what types of services they provide and
determine whether or not demand of those services will remain during a time of
economic change.
SECTORS OF LEGAL PRACTICE LIKELY TO REMAIN STABLE
Some analysts feel that the economic downturn will not hurt the legal industry. This is especially true for firms that handle cases that involve litigation that tends to arise during a recession. One writer in Kansas City feels that the local legal environment is not seeing many problems due to the economic downturn.
The economic slowdown has left many industries
in a pinch. It's a vicious cycle, enough to make even the most hardened
businessperson cry. But Kansas City's legal community is telling a different
story. Although no one is sure whether the economy merely is in
a downturn or whether a full-blown recession is around the corner, for the most
part, the legal business is jumping. W. Russell Welsh, president and CEO of
Polsinelli Shalton & Welte, said it's hard to predict how the economic slowdown
will affect the legal industry, especially because the first quarter was the
best first quarter his firm has ever had.[7]
This
seemingly optimistic point of view may be due to certain factors. The Altman Weil study
of law and economics currently shows which areas of practice are yielding the
most per-lawyer income.[8]
|
Area
of Practice |
Number of Firms |
Average Gross Receipts $ |
Average Total Expense $ |
Average Total Expense %* |
Average |
Average |
|
Civil
Trial Practice |
10 |
280,685 |
124,606 |
44.4 |
156,080 |
55.6 |
|
Commercial Litigation |
15 |
501,217 |
183,458 |
36.6 |
317,759 |
63.4 |
|
Corp./Comm.
Non-litigation |
16 |
302,817 |
121,364 |
40.1 |
181,453 |
59.9 |
|
Insurance Defense
Litigation |
33 |
255,965 |
118,372 |
46.2 |
137,593 |
53.8 |
|
Intellectual Property |
12 |
452,300 |
218,728 |
48.4 |
233,572 |
51.6 |
|
Labor/Employment |
8 |
342,015 |
131,035 |
38.3 |
210,980 |
61.7 |
|
Plaintiffs' Contingency Litigation |
9 |
452,923 |
226,015 |
49.9 |
226,908 |
50.1 |
|
General Law |
281 |
333,305 |
142,042 |
42.6 |
191,263 |
57.4 |
*Percentage of gross receipts.
Currently, the most profitable areas of practice,
in yellow, are commercial litigation and labor/employment.
Commercial Litigation: Bankruptcies and Loan Workouts
Commercial law
generally deals with the “sale and distribution of goods, the financing of
credit transactions on the security of the goods sold, and negotiable
instruments.”[9] Economic hardship often results in an
increase in bankruptcy litigation.
“This is the time to ensure that the practice can do more than put
together multi-million dollar deals. If
the economy takes a nosedive, the firm will want to make sure it can handle the
loan workouts and bankruptcies that often spike in slow economies.[10] Since
a slowing economy drives many companies out of business, it is expected that
many of those companies must file for bankruptcy. “Bankruptcy is one practice area that has experienced a growth
explosion in recent months. Personal
bankruptcy fillings probably will grow by 10 percent to 20 percent in 2001,
after a bankruptcy down cycle, according to SMR Research Corp.”[11] This is one benefit for law firms that
handle bankruptcy during economic crisis.
Firms may find that from the standpoint of business production and public image they will be required to focus either on the side of borrowers or on the side of lenders in loan workouts. Creditors often seek to increase efforts to collect their accounts receivable as a means of increasing income during hard economic times. Inability to repay creditors often leads to commercial litigation. As shown in this chart, firms are profiting from commercial litigation and will most likely see a continuation in this sort of litigation as companies file for bankruptcy and banks and other creditors seek to collect their accounts receivable.
Labor/Employment
Law
The second most
profitable area is labor/employment law.
Disputes in this area include “a controversy between an employer and its
employees concerning the terms or conditions of employment, or concerning the
association or representation of those who negotiate or seek to negotiate the
terms of employment.”[12] During recessions, employers seek ways to
reduce expenses and unfortunately engage in employee termination. Therefore, lawyers representing labor
unions, employers, and wrongfully terminated employees may see an increase in
litigation.
Malpractice
The malpractice are
of law is one that tends to increase during economic crisis. This can be profitable for some lawyers and
threatening to others. When companies
fail, they often look for something or someone to blame. It is noted in a recent Aspen Law and
Business article that studies have shown that during economic downturn,
malpractice suits against lawyers increase.
History
shows that when the economy falters, deals fail, and new companies flame out,
the number of legal malpractice claims surges.
"With a sluggish economy and as transactions fall apart, you have
parties who feel they've been aggrieved, so they start looking around for
someone to sue," says Robert Harrell, a partner at Houston's Fulbright
& Jaworski, who often represents lawyers in malpractice cases. Consequently, he adds, those investors look
for litigious ways to retrieve their investments.[13]
This is a problem
which may occur more frequently in firms that represent large
corporations. Attorneys must
communicate with their large corporate clients to assure that economic unrest
will not cause those corporate clients to turn against them. In regard to malpractice claims, authors
from a professional liability journal note that, “In an economic downturn,
another inevitability is an increase in claim frequencies. As businesses either fail or become
distressed, the lawyers involved in these businesses will come under increased
scrutiny. Between legitimate mistakes
discovered under this increased scrutiny, as well as deep-pocket scapegoating,
it is unavoidable for claim reports to increase.”[14]
A recent study done by the American
Bar Association's Standing Committee on Lawyers' Professional Liability showed
that malpractice claims against lawyers remained relatively stable through the
latter part of the nineties. However,
now that companies and investors are taking a hit from falling stock prices and
consumer demand, an increase in suits against lawyers is a dangerous
trend. “The study found that insurers
can expect to see an increase in the frequency and severity of claims against
lawyers in the years following an economic downturn. Study results are based on
analysis of malpractice claims against lawyers covered by insurance carriers.”[15] The study indicated that over 50% if those claims
are based on legal error or counsel’s neglect.
A recent case of this nature is Gillman v. Waters, McPherson, McNeill, P.C. 2001 WL 1285313C.A.3 (N.J.),2001[16]
where a client brought legal
malpractice diversity action against his attorneys who negotiated the client's
retirement and separation agreement with his former employer. Another is McDannold v. Star Bank, N.A. 261 F.3d 478, C.A.6 (Ohio),2001.[17]
where beneficiaries of an employee stock
ownership plan (ESOP) sued their law firm and appraiser for malpractice in
connection with ESOP’s leveraged buyout of a corporation. The study also showed, however, that nearly 70% of those claims is
settled in favor of the defending lawyer as in Alternative Energy, Inc. v. St. Paul Fire and Marine Ins. Co.
2001 WL 1181103 C.A.1 (Me.),2001.[18]
Coregis Ins. Co. v. Baratta & Fenerty, Ltd. 264 F.3d 302 C.A.3 (Pa.),2001.[19]
is a case in which the court held an insurance company liable for coverage owed
to an insured law firm for legal malpractice actions against the insured
firm. The fact that courts tend to
favor attorneys by 70% in these claims does not excuse legal error or neglect
of clients. If firms wish to tighten
monetary policy, they cannot afford to lose time and money defending themselves
against malpractice claims.
Avoiding Malpractice Claims
An article from John
P. Weil and Company on the Law Practice Management Page offers three strategies
for law firms to avoid malpractice suits.[20] The strategies can also apply to
strengthening firms as a whole. The
first is to develop a carefully
conceived policy and related process for accepting new clients. This would entail each lawyer marketing only
those areas in which he or she has unique experience. Two, to be willing to refer potential clients to others who have
developed the expertise that is required to meet the needs of your potential
client. This would help lawyers of a
firm communicate with each other and distribute clients to the lawyer with the
best specific qualifications. Third, to
concentrate on improving communication and relationships with current clients
before seeking new candidates. This
would ensure that every client’s needs are met before firms are overwhelmed
with other work. These strategies will
help avoid malpractice and may indeed have solved some of the problems
experienced by the Des Moines firm in 1991.
SECTORS OF LEGAL
PRACTICE LIKELY TO DECLINE
During an economic downturn, there is a reduction in the
demand for elastic legal services. The Altman Weil survey (table
above) shows that the least profitable areas of legal service, in blue, are
plaintiff contingency litigation and intellectual property law.
Plaintiff Contingency Litigation
Plaintiff
contingency litigation regards plaintiffs suing others on the condition that
the plaintiff’s attorneys are paid only if the plaintiff recovers either in
court or by settlement. This can
include, among other types of litigation, tort litigation to recover damages
for wrongs committed by others and litigation relating to contracts and
real-estate matters. This is an example
of an elastic service in the area of law.
People wishing to sue someone in these types of cases may not have the
money or the time to seek an attorney and pursue them in court. In a time of a slowed economy, people wish
to conserve their spending on what they need.
Intellectual Property
The intellectual
property area concerns the “intangible rights protecting commercially valuable
products of human intellect. The
category is comprised primarily of trademark, copyright, and patent rights
against unfair competition.”[21] Many companies and entrepreneurs are
currently looking to maintain their economic status and reduce cost. Since this is a rather expensive area of
law, firms may want to make sure their commercial and litigation area is equipped
to handle work in addition to their intellectual property areas. Although intellectual property generates a
high average gross revenue of $452,300, it is also rather costly. The average
expense is $218,728. Since intellectual
property is both costly to firms and vulnerable to subjective interpretation,
it may not be a stable area of legal practice during a recession. Firms must that their commercial and
litigation sectors are secure. It is
more important for firms to focus on their tangible areas of practice.
FINANCIAL STRATEGIES
Profits for law
firms are likely to recede as the economy fades into a recession. An article from Legal News Media.com noted
that in July, 2001, The American Lawyer reported on revenues of the US top 100
law firms. Gross revenues topped $31
billion in 2000. “But profits at these
firms grew only half as fast as revenues, signaling that after years of boom
times, the US economic slowdown is finally reaching the legal world.”[22] The Altman Weil Survey of Law and Economics
reveals how firms allocate their costs.
In order to avoid demise in a recession, firms must address the use of
their funds while keeping attorneys and staff happy. This chart illustrates cost allocation from the 2001 survey.[23]
Attorneys and Staff
It is clear that
most of the firms’ funds go to lawyer income and support staff. During 2000, revenues for the top 100 firms
increased by 20%, but profit per lawyer increased only 10%. To effectively compete, these firms
increased the size of their legal staff by 10% since 1998. “These escalating personnel costs, coupled
with increased expenditures in other areas, ranging from office space to
technology, appear poised to take an increasing bite out of profits if revenue
growth slows in the years ahead.”[24]
One California firm found that in
order to reduce expenses, it had to fire 85 attorneys and 50 staff
members. The firm handled 373 cases of
initial price offerings for technology and dotcom companies during 1999 and
2000. This year, the firm has handled
only 8 cases of this nature. “The mass layoff is the largest to date among Bay
Area firms, hit hard by the slow economy and plodding technology sector.”[25] This is a rather drastic method of reducing
expenses. Firms need to address both
attorneys and staff on how changes in economics trends will affect the firms
both financially and emotionally. It is
a time for attorneys within a firm to help and encourage each other. It is important for attorneys to consider
surrendering income for the good of their firm. Although some attorneys may dislike this
proposition, it would be a cost effective way to save money for the future.
Firing staff members
should not be the only way to approach the cost of those employees. Firms’ management sectors should evaluate
staff members and determine which staff members are most efficient. It is essential that staff members are aware
of economic trends and show particular interest in the survival of their employer/firm. The more firm employees care about the
culture and survival of the firm, the more efficient their work will be. “Firm culture is a precious commodity, and it
can do more to keep good employees in the fold than money or fancy perks. Making an effort to keep the most productive
employees during the slow times will pay dividends in the good times and bad.”[26] Firing of staff members
should be a last resort and practiced by firms only if an evaluation of staff
members identifies some members that are particularly inefficient with little
or no interest in the integrity of the firm.
Temporary Associates
Another trend in law firms is the use of temporary associates. The gap between the salaries of senior partners and junior-partner associates has lessened since the recession of the early 1990’s.
After all, the associate has a
salary with possible bonus and related fringe benefits and none of the
potential liabilities of partnership, such as malpractice claims; long term
lease and bank credit line obligations; and responsibility for firm management
and the generation of new clients for the firm. Some form of shakeout and
restructuring has been long overdue, since the overworked concept of increasing
leverage by hiring more and more associates simply is no longer economically
feasible. [27]
If associates are less concerned with making
partner, they can focus on current tasks and ways to aid their law firm through
difficult times. If associates are
hired on a temporary basis, firms can have greater discretion in the length of
time they employ those associates. The associates, floating from firm to firm,
will also have less at stake if they have greater job potential once they leave
a law firm.
Quality v. Quantity of Work
Law firms usually bill clients based
on the number of hours that the firm’s attorneys spend on each client’s
case. However, trends indicate that
large corporations are no longer willing to pay law firms for the quantity of time
spent on that corporation’s case. A
writer for lawyersweekly.com commented on the change in clients’ attitudes
toward billable hours.
While law firms insist on billing for hours, corporations are
increasingly looking to pay for outcomes, rather than just hours. The emphasis again is on how the law firm is
impacting the business entity's bottom line.
Legal analysts have …encouraged the law firm marketing professionals and
attorneys to become aware of the trends that are affecting the practice of law,
and learn how to work within the new demands to create stronger partnerships
with their clients.[28]
Firms must emphasize the relationships they have with their current clients rather than seeking new clients to increase billable hours. Firms’ attorneys must not only be held accountable for the time dedicated to their clients, but for their performance as well. Attorneys of a firm must evaluate each others’ efficiency. The attorneys may then consider shifting particular areas of practice from one attorney to another and see if results improve. “When properly conceived and carried out, the planning process will enable partners to reach a consensus about goals, identify qualitative and quantitative benchmarks, and develop an action plan that includes timetables and lawyer accountability for performance.”[29]
Other Expenses
Regarding the Altman Weil study of law
firms’ income and expenses, (above
chart,) one can see that the
categories of ‘equipment,’ ‘other,’ and ‘occupancy’ constitute 20.3% of
expenses. There may be
unnecessary expenses within the firm such as lavish materials and expensive
equipment. The Institute of Management and Administration Inc.
offered guidelines for reducing expenses in these categories. They are as follows.
Continue to consolidate your library and eliminate
expensive paper research tools, opting instead for more online services and
CD-ROMs. Renegotiate your arrangements
with online service providers. Explore
subletting some of your office space.
Raise health-insurance deductibles and employee contributions.
Ask staff for suggestions on where inefficiencies can be found throughout the
firm. Review your arrangements with
outside vendors. If you
can cut down on the number of vendors who provide services, you will be able to
save money.[30]
These ideas along
with those mentioned above, can help firms’ attorneys and staff work together
to ensure the success of their firm.
Although oriental rugs in the lobby and expensive paintings in the
hallways are enjoyable, the money spent on those luxuries could be used for a
greater purpose.
ADAPTABILITY
As the events of September 11 have shown, bizarre or tragic occurrences can change the stock market and unemployment rates within weeks and even days. Despite the economic slowdown of the last few months, September 11 is just one example of how vulnerable our economy is to unpredictable events.
Internal Communication
With changes that can rapidly occur such as a stock market crash, damaging the economy of many countries, a law firm must have the ability to adapt quickly, especially if it represents those corporations that are adversely affected. This is often difficult in a firm with hundreds of lawyers in ten different countries. Internal communication in a decentralized law firm may be difficult, expensive, and quite time consuming. Economic changes in one location may not have affected others just yet. Thus, some firm cites may not understand the need for immediate change. If firms have diverse geographic locations, they must appoint leaders or a committee of leaders for each cite. Those leaders must communicate on a regular basis to ensure that they are well informed of each others costs, benefits, and goals. Each cite must be prepared to assist in the event of a calamity happening at another location.
Specialization
Large law firms face
several difficulties with their ability to adapt to economic changes. One, is that larger firms tend to have more
specialized lawyers. If an economic
downturn causes some areas of law to drop in demand, a specialized firm may
find it has more lawyers than it needs to service clients in those areas. Firms facing a recession must be certain
that they have a strong base of generalized legal skills if their main areas of
specialization see a decrease in demand.
An analyst for the Altman Weil company feels that more independent firms
have a better potential for adaptability. “Smaller firms are much more agile and adaptable than larger firms, and
with proper strategic focus, should be able to identify and exploit
opportunities for competitive advantage well ahead of less agile large firms.”[31] In a market approach to legal services in
the Fordham Law Review, it is noted that specialization in firms calls for more
internal communication among attorneys. “As professionals become more specialized
in order to satisfy complex client needs, a collaboration of professionals is
more likely to result in optimal problem solving approaches.”[32]
Marketing and the Internet
Another
large element of adaptability is technological change. The ability to communicate and advertise is
essential for attorneys and the rapid change of technology today can be helpful
or threatening to any law firm. Success
depends on those willing to embrace new technology to increase efficiency. Small firms must especially take advantage of
the increase in availability of information and advertising possibilities of
the Internet. The Internet allows
sellers of goods and services to market themselves for very little cost to a
multitude of people that increases every day.
Large law firms have already utilized in Internet to advertise their
services. They must work on those pages to make them simple, informative, as
well as appealing to newcomers seeking legal advice.
Smaller firms can
also follow this lead. A web page is an
effective way to promote quality as well as an emphasis on personal
attention. They can have pages on pro
bono work, community involvement, interest in the local area, etc. A web page that is nonthreatening and easy
to use will attract clients hoping to spend less money and feel less
intimidated by huge law firms. Although
the Internet is available to everyone, a smaller firm has the ability to
quickly educate all of its employees and coordinate computer capabilities. “These systems have huge potential to
attract large numbers of lay users by providing broad legal self-help
information on the Internet and then linking users to attorneys based on need,
expertise, and geographic location.
This is not a problem in and of itself -- it is a good thing that more
people can find lawyers.”[33] This is a particular area where small firms
can take advantage of the slowing economic times. The Internet is always growing.
If small firms can take the time to educate all of their employees in
computer communication, they will have an edge on larger firms who are unable
to standardize that education as quickly.
SMALL FIRMS
Small firms are better equipped to have a more personal relationship
with their clients. A client may be
more attracted to a firm that they know will have intimate knowledge of their
case and fewer other clients to handle.
Small firms are also much less threatening to less confident clients and
as noted earlier, have the advantage of more generalized practice. Their ability to quickly adapt to demand
changes will be beneficial in competing with larger firms with more specialized
attorneys. Smaller firms may also have an easier time shifting some of their costs
away from attorneys’ salaries. It is
easier to convince a small group of attorneys in an independent firm that a
temporary reduction in income would help the firm remain financially
stable. “The much-heralded demise of mid-sized firms, predicted by at least one
prominent legal management consultant, not only has not come to pass, but has
proven false. There are and will continue to be successful small and mid-sized
law firms that are well managed with a coherent, market-based strategy. The firms that are vulnerable to extinction
are poorly managed firms, regardless of size, as evidenced by the recent
business failure of dozens of large law firms.”[34]
Small firms may also appeal to foreign clients and investors. “For many foreign-based investors or
businesses, the only expertise needed is domestic legal advice, which smaller
and mid-sized firms are as well positioned to provide as their larger, more
expensive counterparts.”[35]
Foreign clients have amazing potential in a rapidly globalizing economy. In addition, some foreign clients might not
be facing economic turmoil consistent with that of the United States. They may
be, therefore, more willing to consume legal services than domestic
clients. Small firms must be willing to
assist foreign clients for each of these reasons.
CONCLUSION
Attorneys
must be willing to be less selfish when the economy is poor. It is inevitable that our economy slows, but
it will eventually begin to prosper again.
Firms must
remain current on economic change as well as the tendency for change in the
demand for legal services. Large firms
should do a cost benefit analysis of their expenses and reduce needless
spending and assist inefficient workers.
Small firms must emphasize their willingness to personalize their work
to assist less confident clients and they will be able to survive if not
prosper during an economic downturn. Difficult economic
times provide both challenge and opportunity for law firms. Those firms both large and small that have
solid strategic plans, adaptable management, and flexible staff may not only
survive, but prosper.