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November 20, 2006

With Foresight, Solos Can Ride Out Economic Downturns

Connecticut Law Tribune - November 20, 2006

When I consult with students and clients interested in going solo, I’m often surprised by the fact that those considering going into business for themselves seldom consider the economic health of this country and how it fits into the design of their business plans. The economy should not deter them from starting their own practices, quite the opposite. But failure to consider the economic direction of this country and demographic trends prevents smart business planning when choosing both practice areas and physical location.

First, it is irrelevant what conditions lead you to solo practice. Whether by design or lack of choice, a gift, even wrapped in the "big firm" rejection letter or pink slip, is still a gift.

However, in this time of economic uncertainties it will be a challenge to sustain oneself in business without understanding how to make the right choices.

The smart solo needs to develop competency in more than one practice area and then develop strategies to maintain and grow those practice areas as the economy changes.

With every demographic trend and economic shift large firms will reevaluate their business plan. They follow the money. They will merge, increase or decrease in size, and/or alter their focus. Well, the economy is seriously downshifting. If you are considering opening your own practice what areas should you consider? Recently, large law firms have been increasing their bankruptcy divisions. Why? This country is fueled on debt. Never before in our history have so many created a lifestyle built on the delusion of wealth called credit. Their party is almost over. Did you think it was coincidence sweeping bankruptcy reform passed making it harder to discharge debt? Bankruptcy lawyers will be in demand for both individuals and corporations. Foreclosure lawyers will be needed in increasing numbers to represent not just those who took out ARMs to buy overpriced real estate but to also represent the mortgage lenders. Elder Law is very fertile ground. Mull over this statistic. It is projected in twenty years Connecticut will have the same percentage of over fifty-fives as Florida. Is it just another coincidence that fifty-five plus communities are proliferating?

What about immigration? The point remains; cultivate practice areas that support demographic trends and the direction of the economy.

Then there are those practice areas which do well in any economy. Family Law; long-term economic hardship fractures fragile families. Criminal Law; criminal behavior will rise as the "have nots" take from the "haves."

Personal Injury; people will always suffer injuries and seek redress. Landlord/Tenant; when people lose their homes they have to live somewhere. Business Incorporations;

those who are laid off tend to become entrepreneurs in order to feed their families. Wills, Trusts & Estate Planning; in good times or bad people protect what they have; Tax law; if people can’t pay for their homes, can they pay their taxes? And, of course, Debt Collection will be big. This list is not exhaustive but you get the drift.

The huge difference, no matter the practice area, will be how much clients can afford to pay you in a down economy. As a solo, your livelihood will turn on your flexibility; your flexibility will turn on your overhead. If you haven’t economized and downsized, your operating costs will sink you. By maintaining a virtual office or a high-tech home office, you will be able to ride out a reduction in clients and fees, be able to offer payment terms and write off unpaid receivables. If you practice exclusively in an area that will be hit hardest by an economic downturn, you need to diversify while you still have an opportunity to reeducate yourself and implement strategies to attract a different client base.

Please don’t confuse me with the grim reaper. Forewarned is forearmed. Too many people stick their head in the sand to avoid harsh realities. Do not marry a practice area (unless you are already ensconced and recognized for your niche and that niche will survive regardless of the economy). Talented lawyers are trained to collect information, process information, and reformat that information to benefit a client. Apply this training to those areas of law that will enable you to keep your livelihood. Smart business people don’t fight the tide. They find a way to stay afloat and survive, while the truly savvy profit.

Susan Cartier-Liebel is solo practitioner, adjunct professor at Quinnipiac University School of Law and a business consultant for solo and small firms. She can be reached at SCartier_Liebel@comcast.net. Copyright © Susan Cartier-Liebel (2006) All Rights Reserved. No portion of this material may be copied, transmitted, posted, duplicated or otherwise used without the express written approval of Susan Cartier-Liebel.

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