$7.00 Gas and the Solo Practitioner - A Glimpse Into the Future?
I've shied away from what some call 'doom and gloom' but it's time to start getting back to economic realities and this dove tails nicely with my recent post on Creating a Total Client Experience.
Job losses will probably accelerate through this year and into 2009, and the job market will probably stay weak even longer. Home prices will probably keep falling, shrinking household wealth and eroding spending power.
"The open question is whether we're in for a bad couple of years, or a bad decade," said Kenneth S. Rogoff, a former chief economist at the, now a professor at . (NYT July 22, 2008)
And Kiplinger says, "plan to dig deep for groceries for years to come." They also say to anticipate double digit increases in your health care costs:
Expect health care premiums to go up 8% on average in 2009, about the same as this year. It marks the sixth straight year that the rise in premium hikes has slowed or held steady after peaking in 2003 at 14%.
But premium increases will accelerate into double digits in 2010 and beyond.
Here is the million dollar question for you as a solo practitioner:
How will $7.00 gas, layoffs, skyrocketing food costs, a trend towards urban living, and overall much tighter economic times for the majority of Americans impact how you market to, attract, and deliver your legal services to your potential clients?
Oil at $146? That was just the opening skirmish in the “peak oil” wars. The latest smart money? $200 oil in 2010, with gasoline at $7 a gallon. And that is going to turn Americans into car-shunning Europeans once and for all—poor Americans, at least.
That’s the latest gloomy forecast from Jeff Rubin at Canadian brokerage CIBC World Markets, who just a few months ago figured $200 oil would be a thing of the distant future—like 2012.
Mr. Rubin laughs off recent attempts to take the steam out of global oil markets. Saudi production promises of 200,000 barrels a day doesn’t dent the 4 million barrel-per-day decline from aging fields every year, for starters. And it will just be “gobbled up” by increasing domestic consumption in Saudi Arabia, like other oil-producing countries that subsidize fuel.
So what about China’s flirtation with market reality by unwinding some fuel subsidies? No luck in curbing demand or prices, either. Not only does China’s recent move translate into $3.25 a gallon gas—still a steal, relatively speaking—it’s given fresh legs to beleaguered Chinese refiners who’ve been operating in the red, thanks to Chinese price controls. So now they are producing even more gasoline and fueling even more cars than they were before. The upshot?
Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America’s highways in history. By 2012, there should be some 10 million fewer vehicles on American roadways than there are today—a decline that dwarfs all previous adjustments including those during the two OPEC oil shocks.
And who will be parking their cars? The 57 million American households that have both cars and access to something resembling public transit. Gasoline at $7 begins to approach prices Europeans have paid for years, meaning that chunk of America “will start to act more and more like Europeans,” Mr. Rubin says. Not soccer moms in a minivan—soccer fans, searching for tokens:
Our analysis suggests that about half of the number of cars coming off the road in the next four years will be from low income households who have access to public transit. At their current driving habits, filling up the tank will have risen from about 7% of their income to 20%, an increase that will see many start taking the bus.
Gas prices already appear to be reshaping suburbia. But what Mr. Rubin is predicting is a far bigger shock to the American system. Europe has had decades to develop a society based on expensive energy. What will happen if Americans suddenly are forced to shoulder European-style energy prices — but without the European-style society to cope with them?
(Agora Financial News - June, 2008)
Consider the above and then factor in all the layoffs you are reading about. When people get laid off and can't find another job they look to start their own businesses. Well, they are going to go to banks to try and get small business loans.
As losses mount at American banks and the pain of the credit crisis spreads from housing and finance to the broader economy, many small companies complain it is increasingly difficult to obtain loans.
Tighter credit could not only help to push the United States into recession, but prolong the downturn as ideas for new businesses get stymied once entrepreneurs sit down with local bank managers, small business representatives warn. (USA Today, July 20, 2008)
How will this rather sudden change in a client's ability to afford your services impact you? How will unemployment as well as the drastic change in their driving habits, relocation closer to work or becoming remote workers, shifting from suburban living to urban living, impact your solo practice? You need to give serious thought to this reality. The lawyer who recognizes this inevitable change in a client's autonomy and the impact on their wallet of unemployment, rising oil and food prices and their inability to get loans..... will have more clients then they can handle.
You need to offer clients more virtual ways of interacting with you; it's less time consuming for both you and the client, less expensive for you and these savings can be passed onto the client while still providing you with a profit. And it more than adequately addresses these trends which are already upon us (although in the earliest stages).
You should now be looking into Virtual Law Offices (VLO), video conferencing, web-based applications which give clients access to their files 24/7, house calls, home offices and any other way you can conceive of which will minimize your costs and allow you to still profit by improving the client's total experience in these challenging times. This isn't a temporary solution to a temporary problem. It is the future of legal practice and how clients will want to interact with lawyers for their own convenience...and driven by their dwindling discretionary income. Solos are the quickest out of the gate when it comes to identifying trends and racing towards the future. Be one of them.
If you've already started to adjust for these trends, please share.