I’ve noticed an interesting trend in current law firm activity. It’s slowed down, almost to a crawl. But it’s not the results of a change in markets for law firms. It seems to be a reaction to the tumultuous world around us. Trump’s on again, off again tariffs and uncertainty about their ramifications. The Canadian election. Even the time of year: the shoulder season of the end of spring and the beginning of summer when you just don’t know if it’s safe to plant yet. It’s a mood of unrest, wait and see, and fear of making a mistake. But here’s the thing: this is the type of environment where strategic, decisive actions can make the biggest difference to your future. We should hope for the best, but realistically think about what might be coming next. I don’t believe Canada will suffer economically as much as the US will, but despite what it says on your calendar, a version of winter is coming and we need to be prepared for it. Here are just a few suggestions to consider.
Finances: review all of your contracts and agreements to ensure you need them all. Renegotiate any that you can. Consider how much space you really need, given the percentage of your workforce that is remote. Ensure you are creating realistic financial targets, and adjusting Partner expectations where needed. Don’t repeat the mistake that many law firms made during the pandemic: they reduced Associate and even staff compensation, but made very minimal changes to Partner compensation (and/or made those last). This lost a lot of loyalty and caused many Associates to play the musical chairs game in which many firms are still caught up.
HR: now is a good time to really look at your people and make decisions about who should stay and who should go. It will only get more difficult if/when the economy toughens. Any departures may also mean a rejigging of current workloads. You want to have time to make these changes and train people up now.
Practice Management: Practice groups are much more efficient (and ultimately, far more profitable) than running a firm of individual lawyer practices. Practice groups are also a more efficient way to run a firm in terms of training, marketing, and organic succession. Also, now is a good time to critically analyze your practice areas and determine if you are in the right areas, if you need to divest of any areas or start in any new areas to the firm. This is where analysis of historical accounting data by practice area really helps. Do you have the right matter types to allow for this analysis? If not, fix them.
Individual Lawyer Management: Set targets and hold people to them. If they aren’t hitting their targets, something needs to be done about it. (In other words, don’t hold off for another year hoping things will magically improve). This might include stronger internal mentoring, hiring an external coach, or terminating the lawyer’s employment. Too many firms allow too much time to go by before taking action. We just don’t have the luxury of that time and money at this point.
I also advise firms to have at least six months of operating capital in reserve somewhere. If you don’t have this in place already it’s never too late to start. (But start now!) You can rely on a line of credit but it’s better not to have to do so.
Doing nothing is a bad idea. Start thinking strategically about the firm, and what you can do now to help position it for strength whatever the future holds.
Heather Gray-Grant is a business strategist, marketing expert and executive coach for law firms, lawyers and administrators. She can be reached at heather@heathergraygrant.com