Yes, it can be a “sink or swim” time in our economy. Most of us hope that we can hold on and at least tread water for awhile to stay afloat. In spite of this, I don’t know about you, but I wearily endure the continuous doom and gloom about the current economic downturn. You can’t turn on a television, pick up a newspaper or surf the web without a constant barrage of gloominess. Sure, we have to face the fact that the situation exists and it has affected millions of people, but it makes me wonder if matters might improve and confidence levels start to improve if it were not for the constant pessimism that we’re bombarded. That’s not to say that we shouldn’t be realistic. There are strategic approaches that should be taken to survive the tide of economic woes without sinking. And, likely there are opportunities to be discovered to not only survive, but to re-adjust and even thrive through the recovery. Below are a few ideas and resources that are available through The Missouri Bar’s Law Practice Management Information Center to help you survive in the troubled waters of the economic downturn. Check with your state bar association. Many of these same resources should be available through your state’s organization.
You Could Sink if You Take the “Stick Your Head in the Sand” Approach.
If you’re in denial and take the “stick your head in the sand” approach, you could easily perish in this economic environment. You’re more likely to survive by facing the reality and being ready to make quick adjustments. Start by reviewing and revising budgets or developing a budget if this hasn’t been your practice of doing business. Carefully review expenses – most of us can survive fairly well by cutting out extras for awhile or shopping around for better deals for necessary goods and services. While some expenses are fixed, most are variable. Focus on keeping your fixed costs at a minimum and work on reducing variable expenses. And, don’t cut out important services, such as professional liability insurance in a climate when you’re more than ever likely to be sued. Be sure you have a cash-flow statement, which is a snapshot of your firm’s current financial health that can signal you when you need to take some action. It’s also the guide as to how much, if any, you can draw to take home during this period. Take a hard look at both your personal and business debt to see if some restructuring is in order. See if you can take advantage of lower rates, which is an upside during these times. Consider outsourcing some tasks, such as payroll, bookkeeping or technology maintenance. It might be more economical for you to spend your time on developing your practice or working on client matters that would bring in more revenue than you would pay for the outsourcing.
Resources:
Profit Planning and Budgeting for Law Firms
Controlling Law Firm Overhead and Maximizing Resources
Results-Oriented Financial Management
The Profitable Law Office Handbook – Attorney’s Guide to Successful Business Planning
Law Firm Accounting and Financial Management
The Lawyer’s Guide to Increasing Revenue: Unlocking the Profit Potential in Your Firm
Avoiding Legal Malpractice Claims
Stay Afloat by Looking for Inexpensive or No-Cost Services.
Look for resources available without cost or discounted by your state or local bar association. For example, The Missouri Bar offers free online legal research through Fastcase that could significantly cut your legal research costs. Learn how to use Fastcase through scheduled webinars and earn free MCLE credit. Find other opportunities to effectively manage your MCLE dollars while still keeping your skills sharp. Consider attending an appropriate conference. Here the Missouri Bar Solo and Small Firm Conference held in June, is offered at a bargain rate where you can earn all your credits needed for the year. You’ll also be able to network with other lawyers for referrals and find a support system with other solo and small firm practitioners. Sign up for free referral systems, such as the one offered in Missouri. The Missouri Bar’s Lawyer Search is a member benefit that connects potential clients to you through the Bar’s website.
Build a Life Raft with a Business and Marketing Plan.
A written business and marketing plan allows you to focus on attracting clients to your firm. If you don’t have a written business plan, now is definitely the time to develop one even if you have a well-established firm. This process causes you to thoroughly think through your business plans, polish strategies, and develop goals. This may be particularly important if you need to seek a bank loan. Your business plan should be an ongoing project that is reviewed often to make adjustments when necessary.
Resource:
The Lawyer’s Guide to Creating a Business Plan
Stick Together in the Troubled Waters.
Whether they like it or not, your staff is in the troubled waters with you. Your survival is linked to their survival. So, take your staff into the situation – create a “we’re all in this together” attitude – to ease concerns, improve productivity and client service to get you through these times, but be honest as you go. If at all possible, you want to maintain your high quality staff for better times even if it means foregoing pay increases for a year. You may have to make some tough decisions about non-productive staff. Be on the look out for opportunities to hire staff with specialized skills or associate with a “suddenly available” attorney with special expertise that may benefit your practice. The hard-to-find, experienced paralegal that you’ve been looking for may now be available because of downsizing elsewhere. Working with a paralegal may make you more competitive by being able to offer legal services at a reduced cost to make your firm more attractive to clients in this current climate. You may also be able to take on more clients than you otherwise could handle without a capable paralegal to assist you. Talk with your family about your practice, get their buy in and help them understand that household budgets may need to be slimmed down. Again, create a “we’re all in this together attitude” to take the pressure off you, and work together to survive until better times return.
Resources:
The Art of Managing Your Support Staff
Leveraging with Legal Assistants
Building Your Firm with Associates
Paralegals, Profitability, and the Future of Your Law Practice
Getting the Most from Your Support Staff
Throw Out Lifelines to Develop Business Referrals.
Focus on throwing out lifelines by rekindling and developing new relationships with other lawyers and business acquaintances that might refer business to you outside their practice area. You might invite lawyers that you’re acquainted with for lunch or an after hours round table to kick around ideas to get through this troublesome time. Consider developing an electronic newsletter filled with useful information to inexpensively stay connected to your current or potential clients. Start a blog or join social networking groups such as LinkedIn, Facebook or others where you might attract new clients, referrals or find someone to mentor you as you transition into a new practice area.
Resources:
How to Get and Keep Good Clients
Marketing Your Practice
A Lawyer’s Guide to Marketing on the Internet
Throw a Net Around Your current Clients.
Now more than ever you’ll want to maintain your current client base by providing the best client service in your community. The secret to maintaining a good client base is simply providing quality service, maintaining frequent communication, and providing services at a reasonable cost. Focus on treating clients well and training your staff to be especially courteous and attentive to client needs. Clients are very likely facing many of the same issues as you are. You might be able to ease some of their uncertainty through your legal counseling and assessment. Depending upon your area of practice, consider visiting clients at their business to show support. A bit of hand holding during turbulent times can bring tremendous loyalty from your clients. Don’t hesitate to ask your clients for referrals and thank them profusely when they do send you a referral.
Resources:
Connecting With Your Clients
Keeping Happier Clients
The ABC’s of Marketing for Sole Practitioners and Small Law Firms
Writing Your Law Firm Newsletter from Start to Finish
Fish in New Ponds for Clients, but Don’t Drown in Trouble.
There are likely good, maybe even great, opportunities during this time to refocus your practice to bring in a whole new group of clients. It’s a matter of looking for these new opportunities in the ever changing law and then getting the education that you need to competently practice in these areas. This could mean teaming up with other firms to share expertise. Do resist the temptation to take on clients with matters outside your area of expertise that could drown you in trouble without first building up your knowledge base or working with a mentor.
Don’t let them take you down with them.
Resist the lure to accept clients with the means to pay during these times when you know they will only cause you grief. As tempting as it may be, consider that just because they can pay doesn’t mean they will pay you. Reserve the time you might spend working for free for an ungrateful client to build referrals, market your practice, or improve your skills for a hot new area of practice that you’ve identified. Conversely, current clients that are not paying as agreed are a financial drain on your firm at a time when you least can tolerate it. Purge these clients, but be sure to follow the ethics rules when doing so.
Resources:
How to Draft Bills Clients Rush to Pay
You and Your Clients – A Guide to Client Management Skills for a More Successful Practice
Wear Your Life Jacket!
Its always good advice to get your money upfront before you jump into the water with a client – but even more so now. Consider offering clients the option to pay by credit or debit card. If you have receivables, watch them like a hawk and spring into action early when due dates have slipped by without payment. Review receivables on a weekly basis to keep your practice above water. You may consider some fee arrangement concessions for loyal, long-time clients who are having troubles during this economic downturn. If it’s likely they will survive the slump, rather than turning them away during a time of need, you can create even more loyalty when better times return by working on some reasonable fee concessions. On the other hand, don’t fall into the trap of continuing to represent the client when there is little hope that you’ll be paid. Everybody loves discounts and clients have come to expect them in this market. Consider getting old receivables off the books by offering a deep discount to non-paying clients if they pay the discounted bill within 30 days. Reward good paying clients with a discount if they maintain their advanced payment deposit. For hourly rated clients, consider offering a small discount if their bill is paid within 10 days.
Resource:
The Lawyer’s Guide to Modern Payment Methods: ACH, Credit, Debit, and More
Think About Swimming Away from the Billable Hour Billing Approach.
Many clients resist what they consider a “blank check” billing method with hourly rates especially in this market. Alternative billing options may give you an advantage over other firms and lure new clients to your firm. However, you’ll need to know your break even point, reflect on your income goals and carefully study how to price your services using flat or fixed fee rates as well as other billing methods. Furthermore, don’t overlook assisting clients that are unable or unwilling to pay for the full range of services. Consider offering to serve these clients for a flat fee in a limited scope representation arrangement. Clients who have the means to pay may actually move beyond their “lawyer phobia” after having a good experience with you and become loyal, paying clients for future services.
Resources:
Beyond the Billable Hour: An Anthology of Alternative Billing Methods
Winning Alternatives to the Billable Hour
Billing Innovations – New Win-Win Ways to End Hourly Billing
Unbundling Legal Services – A Guide to Delivering Legal Services a la Carte
Tread Water in your Community.
Consider getting out in your community to offer assistance to charitable and civic organizations where you may catch the attention and develop relationships with a whole new group of prospective clients. Network in the business community – consider writing articles for local publications, offer seminars on hot topics of interest during these times for civic or church groups, or offer up yourself to a local radio program. You might even develop short, informational courses on hot topics for your website. If you don’t have a website, now is definitely the time to make that investment, which can be done inexpensively today.
Resources:
Organizing Successful Client Seminars
Resuscitate your Practice.
Prepare yourself mentally for slower times for awhile, and use the time to build systems in your office that you otherwise haven’t had time for so that when times do improve, you’ll be ready to go. Take any extra time to learn new technology to improve your efficiency and skills. Develop a written plan in case of your death or disability rather than leaving your survivors to deal with winding up your practice at a time that would be doubly difficult. This is particularly important if you’re a solo practitioner.
Resources:
Planning Ahead Guide for Death or Disability
Law Office Policies and Procedures Manual
Stay Afloat by Doing Contract Work
Firms who have downsized and have a slim work force may have a need for attorneys who are willing to do contract work. This may be a way to supplement your income to get you by until better times return.
Resource:
Practicing Law Without Clients
Keep your Eye on the Shoreline by Staying Positive.
History tells us that times will improve. If you’ve planned for rainy days, – in this case a rainy season – you’ll likely survive with a new outlook while you wisely use a slow down to improve your practice and skills. The current economic situation may cause you to refocus on exciting new opportunities that you may never have taken were it not for an economic slow down. For others it may be a time to do some major soul searching and consider other alternatives to use your legal education that could produce a more fulfilling career with less stress. Either way, we’re part of a resilient country that very likely will continue to bring new opportunities even if those opportunities look a bit different than you originally planned for.
Resources:
Turning Points
What Can You Do With a Law Degree?
NonLegal Careers for Lawyers
Breaking Traditions
Changing Job – A Handbook for Lawyers
In our state the resources listed are a part of The Missouri Bar’s Law Practice Management Center’s lending library. To review all the items available, visit The Missouri Bar website at www.mobar,org and click on Online Law Practice Management Center. A printed catalog is also available upon request. You may borrow resources from the lending library for up to three weeks for a very small shipping fee. Check with your state bar association to see if there are resources like these available through their headquarters. Or, you may purchase these publications from the ABA at a discounted rate through the Bar’s website.
