COVID-19 is a novel coronavirus, but economic downturns are nothing new. As the world continues to adapt to the pandemic's repercussions, law firms can turn to past economic crises for some lessons about what they might expect and how they might capitalize.

  1. Some Practice Areas Heat Up
    When the economy falters, litigation, restructuring and mergers and acquisitions historically see significant upticks. You might suspect that transactional work would drop off, but that is not necessarily the case. Market swings, governmental stimulus packages and regulatory adjustments can drive transactions. It may pay off to invest in building or expanding your firm's capabilities in one or more of these areas.
  2. Existing Trends Accelerate
    Long-term trends generally do not evaporate due to economic problems; instead, they pick up speed. For example, continuing cost pressures and a more mobile workforce had some firms thinking about reducing their footprints before the pandemic, and such reductions could become more pressing. Similarly, competition from alternative legal service providers and pressure from alternative fee arrangements could affect staffing. The commoditization of legal services from the clients' perspective, as well as their cost-consciousness in a tight economy, might mean an even greater focus on pricing.
  3. Pricing Discipline is Essential
    That said, resist the temptation to slash prices. Such moves often come back to haunt law firms. For example, avoid offering discounts unless you stand to benefit from, say, a guaranteed volume of work. Also, do not extend discounts to delinquent clients simply to get cash flowing. It sets a precedent that encourages clients to delay payment in the future.
  4. Client Communications Matter
    Regular communication with clients always is vital, but this is especially true during uncertain times. Reassuring communication can strengthen relationships and improve client retention. Partners should reach out to the most important clients, whether in person or by videoconferencing. Practice groups should send timely client advisories on relevant issues. It is a good time to survey clients on how you can better serve them. You will show your concern and, ideally, identify some opportunities to proactively respond to their needs.<

Maintain two visions

You may feel overwhelmed dealing with short-term issues, such as cash flow, but do not take your eye off of the future. The decisions you make today can lay the foundation for long-term sustainability — or undermine it.

Originally published by Ostrow, November 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.