Law After the Boom - It's Over For Big Law...But What About Solos?
In his inaugural post for American Lawyer and now appearing at Law.com, Paul Lippe, founder and CEO of LegalOnRamp (catering to Big Law) discusses why Big Law must recognize the Boom is over and rethink how they are going to approach the future.
The boom in the legal industry, sustained by the boom in financial services, is over.
Welcome to the future.
For those of us who've spent most of our careers as clients, it seemed pretty obvious that the legal business was in an unsustainable boom. Consider: In a country where most people's incomes have been flat or declining over the last eight years, and most companies face increasing global competition and flat profits, partners in big law firms generally saw their income double every four to six years over the last 15 years. And the firms have generally grown in profits, staffing and revenues faster than most of their clients.
Many folks in law firms have come to believe that the law business operates according to a different set of economic rules than their clients' businesses, but the truth is much simpler: When you're inside a boom, you always think your industry has achieved immunity from the laws of gravity, because it's the only reality you can see.
And this is the history of Big Law these last two decades. And you can read all about the legal news, layoffs, crunches, de-equitizations, etc. Surprisingly it's not too long after we were reading about the astronomical first year associate salaries. Kind of reminds us of the real estate boom...skyrocketing home values before the bubble burst Yes, the boom is over. And Big Law will be on the verge of another implosion. The difference is they are being blind-sided because " When you're inside a boom, you always think your industry has achieved immunity from the laws of gravity, because it's the only reality you can see."
What struck me when reading the article is this: Progressive solos have always known the reality. They knew this six or so years ago when the 'boom' was just starting. And this is why I'm bringing it to your attention. Solos have always been so far ahead of the curve, more nimble and able to make decisions quickly, with less baggage. But they often forget they are much better positioned in most economies because of their solo status. I've written about this before, not because I'm prescient but because I pay attention to the world around me, not just as a lawyer but as a consumer, too.
In my opinion, how world issues impact me as a human being, American, mother, wife, homeowner, investor, tax payer and more should determine the structure of the services the legal community should be providing to me. This includes the method of engagement and delivery of those services and at what price points and payment methods. To ignore your personal circumstances when marketing to and engaging with potential clients is to be out of touch with your potential client base, your business and marketing plan. You are setting yourself up for unnecessary struggles, or much worse, failure as a solo practitioner.
Sound simplistic? It is...and it isn't. Most solos do not practice Securities and Exchange law or Mergers and Acquisitions law. They practice law for the every day person. This includes bankruptcy, family, trusts and estates, real estate, criminal, personal injury, small business incorporation, landlord/tenant or a combination of two or three of these practice areas. As such, your clients are very much like you and I in that we could all end up needing one or all of these types of legal services at some point in our lives. When we have to hunker down for this long, cold economic winter which is coming sooner rather than later, so do they. We are heading into tough times. And that is the key to surviving after the boom....understanding those we serve are no different then ourselves when it comes to being able to afford services.
So, ask yourself the following: if you were to get a divorce what would you expect to pay and what terms would you want? How tech-savvy, creative and considerate of your economic reality would you want your lawyer to be? If you were declaring bankruptcy or looking to save your home how stressed would you be thinking about legal bills even though you realize you need an attorney? Therefore, how are you encouraging clients to contact you knowing this is weighing heavily on their minds especially since pro se status is an option in most of these areas? What message will you deliver which will resonate with them and encourage them to hire you instead?
Everyone can't service the ultra-wealthy. So, those that talk about premium pricing and focusing on the uber-rich are limiting your options. Plus, not everyone wants to service the gilded class. There are many more people who you can serve by reaching out to main street America, those who will be impacted by the economy and the everyday stresses of life which will hit most of us.
The only way to do this effectively (and I know the horse is already dead but I'll keep beating it anyway) is overhead. The more you can reduce your overhead while delivering services through effective use of technology, the more you have the flexibility to accommodate your clients while still turning a profit with creative pricing structures (as the law permits). And this should also extend to your personal life, not just your professional life. There is no way around this today. The market demands it. The economy demands it. When you learn to live on less it doesn't stop your opportunities to grow. It does, however, create a habit of smart versus excessive spending and therefore allows you to profit with a limitless upside.
As solos, we don't have to worry about de-equitization, layoffs or working in law firms who believe they live in another economic reality. We know the reality. Always have. This gives us a leg up in shaky economic times.
What strategies have you implemented to deal with our 'new' economic times?
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