Managing Hard Economic Times As A Small-Firm Lawyer

Law firms, like any other type of business, need to manage economic fluctuations so that they are well-positioned to thrive in any economy. Biglaw firms and smaller shops may adopt different strategies in an economic downturn given the headcount and operations of various firms. By keeping a few strategies in mind, lawyers who manage smaller law firms can help ensure better outcomes during difficult economic periods.

Stay On Top Of Invoices

During good economic times, lawyers at smaller firms may not send out invoices promptly at the end of the month. This is because attorneys often believe that billing as many hours as possible is the top priority of a lawyer, and sending out invoices or completing other administrative tasks should take a back seat to billing hours and completing client work.  However, during tough economic times, clients may take longer to pay invoices since clients are also feeling pressure that might trickle down to their vendors.

One way that law firms can contend with this issue is to stay on top of invoices. This includes sending out invoices at the earliest possible time and staying on top of overdue invoices to ensure payment as soon as possible. Clearly, law firms should stay on top of invoices during all economic times since this is a solid habit that leads to positive economic trends for a firm. But when clients are less likely to pay invoices due to economic issues, it is even more important to make it as likely as possible that clients will timely pay invoices.

Keep People Busy

During hard economic times, there may be less legal work than during normal times since clients are less likely to procure the services of a lawyer. As a result, lawyers might find themselves with more free time during difficult economic times than during normal periods throughout the life of a law practice. It might be difficult for lawyers to fill extra time, and some lawyers may bill more hours to the files that they do have, which is usually not helpful since this may jeopardize relationships with existing clients.

During hard economic times, lawyers can keep themselves busy with marketing and business development tasks. This has the advantage of keeping lawyers busy, and such projects may lead to additional work. Morale can suffer greatly if lawyers are not busy, so it is important to think about marketing and administrative tasks attorneys can complete when work is slower during hard economic times.

Think Of The Long Game

During the Great Recession, many law firms announced significant layoffs in order to cut costs to contend with difficult economic times. Law firms eventually realized that this strategy might have been short-sighted since some law firms were missing attorneys with particular levels of experience years later due to layoffs during the Great Recession. During the COVID-19 pandemic, many law firms reduced salaries temporarily rather than lay off workers so that they could save money while minimizing the potential blowback from layoffs.

Law firms may feel like they need to take rash action during difficult economic times to minimize costs and protect their bottom lines. However, law firms should understand that some actions they take to improve their conditions in the present can have long-term consequences they may want to minimize.

It is unclear if recent economic events will lead to a short- or long-term decline, and law firms may not take action anytime soon to deal with the current economic uncertainty. However, there are a few strategies law firms should consider when positioning themselves well during difficult economic climates.

Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothman.law.

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