Vol. 32, No. 2, 8. Riding the Economic Roller Coaster: What NOT to Do in the Downsizing.

• Author: By Ed Flitton

Wyoming Bar Journal

2009.

Vol. 32, No. 2, 8.

Riding the Economic Roller Coaster: What NOT to Do in the Downsizing

Wyoming Lawyer Issue: April, 2009

Riding the Economic Roller Coaster: What NOT to Do in the Downsizing By Ed Flitton

When you're riding a roller coaster, it's nearly impossible not to look in whatever direction the ride is going. When the roller coaster is heading up, you're physically aimed up with it, and the sky is all you see. Likewise, when it's going down, your sights go with it to the bottom of the track and it's hard to imagine ever swinging up again. Riding the economic cycle as a law firm leader has much the same effect. Whether times are good or bad, it's hard to imagine them being otherwise. Without question, the current economic downturn is affecting the financial performance of most law firms, be they large, midsize or small. Here's just one statistic: Those measuring the performance of the largest law firms estimate that this will be the biggest downturn for those firms in the past 15 to 20 years. Yet no one is predicting a permanent downturn in the demand for quality legal services, and that is where firms should steer their sights. In fact, even small businesses will increasingly have to compete internationally, deal with intellectual property and labor issues, meet more energy-related regulations, and have other needs that will continue to grow dramatically. Meanwhile, even as our law schools continue to pump out the same number of graduates, fewer of those graduates want to practice law. So the real long-term -challenge will be to fill the increasing need for quality legal services.

It's critical for law firm leaders to bear these facts in mind when managing their firms through today's economic crisis. The key is to manage the firm for its long-term best interests rather than for this year's distributions to the partners. To guide you toward that goal, here are suggestions on what not to do when dealing with the tough times.

Don't Merge Because of Nerves

I am not against mergers. On the contrary, with businesses of all sizes requiring more and more expertise from their law firms, a well-thought-out merger can provide the depth and sophistication to keep the best of your clients. But when the economic roller coaster seems to be going ever downward, some partners will argue that a merger is...