August 04, 2008

$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 International   Monetary Fund, now a professor at Harvard. (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: 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.

Attention-grabber (CIBC)

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.

June 23, 2008

Are You A 'YAWN'ing Solo Practitioner?

Yawning_man1 With all the discussion about Millenials and Slackeoisie, we may have discovered the ultimate highly motivated, ethical "un-consumer' in this generation as well, the YAWNs (Young And Wealthy but Normal).  And it's no wonder we don't hear about them.  The majority deliberately stay under the radar.  They do not fall victim to competitive consumption. And given the greatest number of bankruptcies are now Baby Boomers, well, maybe you can learn something important from the YAWNs about how to run your solo practice.

Since I've started doing one-on-one focus group sessions with new solos to help guide the education at Solo Practice University, I am finding much of what is being stated in this Kiplinger article quite true about those who are aspiring towards the 'W' in the Yawn. (When you read this article you will see Bill Gates is their unofficial leader...yes, he's absurdly wealthy....but the new generation of aspiring YAWN's are creating a lifestyle along the way to earning their version of "W" which can only be achieved with a solid work ethic.)

So, how does a solo practitioner live a 'YAWN' ing lifestyle?

  • Extremely low overhead(personal and professional) including serious consideration for the home office option;
  • Smart low-cost operational office purchases which keep them untethered to a phsycial location or traditional office hours;
  • Paperless office - addresses efficiency, low overhead, being untethered AND environmental concerns;
  • Taking on those clients or legal issues which fire up their passion reminding them why they went to law school and also gives them the freedom to serve the indigent or new business owner without putting themself out of business;
  • NOT feeling compelled to network in conventional ways or ways which go against their 'lifestyle' choices;
  • Using social media for both business and pleasure;
  • Understanding there is no 'work' life and 'personal' life...but just 'life.'  I'm finding aspiring YAWNs in their 20's don't have traditional Monday through Friday mindsets.  Each day plays out as a combination of the two and can no longer be so cleanly divided.  Nor can the hours in a day thanks to technology.

I'm sure this post will raise somebody's hackles.  Anything I write which doesn't pay full homage to the old guard while eschewing the new usually does.  But you see, I can respect what was, is and will be equally and with full appreciation of all. 

But the fact is, aspiring YAWN's aren't swimming against the tide loaded down with baggage everyone else thinks they ought to carry.  They are going with the flow consciously unencumbered....and, in my opinion, in a much more interesting river. 

June 22, 2008

"Tip of the Week" - Investigate Landlord/Tenant Law as a Practice Area

Renting has never been higher since the rise in foreclosures.  And home ownership has had the sharpest decline in 20 years since the banks have made it increasingly more difficult to obtain mortgages based upon this past year's mortgage disasters. According to this New York Times article:

The percentage of households headed by homeowners, which soared to a record 69.1 percent in 2005, fell to 67.8 percent this year, the sharpest decline in 20 years, according to census data through the end of March. By extension, the percentage of households headed by renters increased to 32.2 percent, from 30.9 percent.

The figures, while seemingly modest, reflect a significant shift in national housing trends, housing analysts say, with the notable gains in homeownership achieved under Mr. Bush all but vanishing over the last two years.

Many of the new renters, meanwhile, are struggling to get into decent apartments as vacancies decline, rents rise and other renters increasingly stay put. Some renters who want to buy homes are unable to get mortgages as banks impose stricter standards. Others remain reluctant to buy, anxious that housing prices will continue to fall.

It seems to me all those who have made their livelihood with real estate closings should have a division dedicated to landlord/tenant contracts, disputes and evictions as well as 'rent to own' agreements and other creative endeavors involving housing.

“The bloom is off of homeownership,” said William C. Apgar, a senior scholar at the Joint Center for Housing Studies at Harvard University who ran the Federal Housing Administration from 1997 to 2001. “We’re seeing more dramatic growth in renters and a decline in the number of owners. People are beginning to understand that homeownership can be a very risky venture.”

Mr. Apgar said the Joint Center had predicted an increase of 1.8 million renters from 2005 to 2015, given expected population trends. Instead, they saw a surge of 1.5 million renters from 2005 to 2007 alone. In the first quarter of this year, 35.7 million people were renting homes or apartments, census data show.

“Even though we’re only looking at a short period, these trends are pretty powerful,” Mr. Apgar said.

June 13, 2008

Put Yourself In Your Client's Shoes - Is It A Good Financial Fit?

Just the other day I ran a Quicken year-to-date comparison on five non-negotiable household expenses. While I expected to be unhappy at the increase in my day-to-day expenses, I didn't expect to be slack-jawed

                               2001                                      2008

Home Heating Oil $ 1,000                                   $ 4,790

Gas                      $ 2,600                                   $ 5,200 

Food                    $ 6,240                                  $ 10,400

Electric                $    600                                  $  1,080

RE Taxes            $  4,200                                  $  6,600

TOTAL                $14,640                                  $ 28,010 

That's nearly a 100% increase in five mandatory expenses in just seven years.  This analysis showed me how nearly $14,000 in discretionary income got swallowed up by non-negotiable expenses. And my husband's salary only increased 2.5 - 3% per annum.                     

The reason I bring this up is to show you while you may be squeezed as a solo practitioner, raising your prices is not necessarily going to be the answer to covering your bills.  Your clients, if you deal with individuals, are going to be looking at their non-negotiable expenses, too, and deeply distressed.  Their discretionary income is evaporating as well.

This begs the question:  How will you be coping with your potential clients loss of discretionary income and their increasing inability to pay you for your services?

Are you thinking about reducing your overhead expenses, going home to go to work?  Will you be able to provide necessary legal services at affordable rates which will enable clients to still hire you rather than trying to go pro se or using forms?  Simply telling potential clients their legal matter is too complicated to do without a lawyer or you provide great 'value' will not dissuade someone from doing it themselves if they are frantic over their financial obligations.  You need to provide a pricing structure, including payment terms, which allows you to earn a living while successfully encouraging a potential client to hire you rather than trying to handle their legal needs themselves.

It is all well and good to simply say, "I'll charge premium prices for premium services" and then target the affluent. That pool is very small and shrinking further. Plus, everyone and their brother is competing for this business which turns the affluent into negotiating buyers. Realize if everyone is experiencing this dramatic shift in their budgets, it is the lawyer who is tuned in to this angst, addresses it with a pricing model which still permits them to take home 60-70% of each dollar earned, who will have plenty of work to do and turning a nice profit.

The Key:

  • Analyze your overhead; and
  • Your (in)effective use of technology; and
  • delegation of less profitable tasks;
  • See if there is any opportunity to decrease your overhead while increasing your productivity; and
  • Look at your pricing structure to see if you can improve upon fees, payment terms and payment options.

Put yourself in your client's shoes.  What have you done to help them make the decision to hire you easier in these trying economic times?

June 09, 2008

Can You Really Afford To Bash The 'Millennial' Lawyer?

(This is a little long but worthwhile :-)

There has been much discussion recently about the Millennial in the workforce and particularly in law firms.  I need to weigh in because I feel differently then those in the legal community who have been quite vocal about their disdain for what is being called the 'Slackeoisie.'  While I immensely respect the writers of What About Clients? and the prolific Scott Greenfield, I view this generation differently then they do.  (And as 60 minutes portrays here.)

Maybe it's because, even though I'm two generations removed from a millennial, I understand some of what they feel. I don't believe the mindset of the Millennial is a new one. I think in large part they just harbor more entrepreneurial drive then previous generations....and I get entrepreneurial.  They are not willing to put off starting their dreams. They are certainly less inclined to sacrifice unless their career goal is attainable within a relatively reasonable period of time. They don't see their world segmented - work life in one corner and personal life in the other.  They just see 'life.' And there is a stronger belief in one's self but it has been nurtured on a fast food mentality.  They are simply in the fast lane 24/7.  It's saying 'no' to the old model.  And it is by saying 'no' some interpret them as arrogant, disrespectful and dismissive of those who did work within the old model to get where they are today.  I believe this is what irks those who have trudged the traditional through 10 feet of school...without a winter coat.  We can't be mad at an entire generation because they don't want to play by the rules most of us felt we had to abide by.

Of course, there is much more (positive and negative about this generation) that can be (in)appropriately broad-brushed.  Yet, as in any generation there are those who are driven to achieve who have a strong work ethic and those who are slackers.  But for some reason, this generation is really getting slammed.  I believe it is unfair.

What role has corporate America (you and me) played in this?  Let's see.  These kids grew up:

  • watching their parents slave away at jobs only to be laid off over and over, again,
  • lose their pensions and health benefits to criminals like Enron;
  • watching corporate America outsource their jobs overseas;
  • seeing a corporate culture change from one where employees were valued and shown appreciation to a culture of poor treatment and being told they should be grateful to have any job;
  • being told if they didn't like 'any job' there's ten more people who look just like them lining up to take their place. 

The days of feeling proud for having given all your working life to one company and getting the gold watch and retirement dinner have disappeared. Today's young worker sees working for another based upon the old model as indentured servitude with no realistic brass ring and they want no part of it.  This is especially true after being told over and over again that their generation will be the first generation to not do as well as their parents.  Now there's an exciting future to consider as they carry $100,000 + in student loans. 

So, if they want to do an end run around the old model because they think it's broken can we really fault them?  If they want to look up at the sky and see endless possibilities of their own creation rather than the big round butt of a manager who blocks their innovation and creativity can we blame them?  If they want to try and figure out a new and better way that works for them should we tell them they're wrong and publicly ridicule them for trying?  Who are we to say what is best for them? Now who's being arrogant, disrespectful and dismissive?  What I have heard over and over, again, from clients and others is, "I wish I hadn't been so scared?  I wish I had their guts."

Bravery, it what you will.  But those brave or stupid people created Google, Zappos, Amazon and so much more than we could ever have anticipated because they DIDN'T follow the traditional models (all driven on customer service and regard for their employees, mmmmmm).

And for those who are in management at law firms, have you ever heard of 'internal marketing?'  It is a wonderful phrase coined by Sybil Sterchik who discusses the concept during an interview with Toby Bloomberg at the very popular Diva Marketing Blog.  She says that when you value your employees, your employees value your customers. 

Internal Marketing is a strategic blend of marketing and human resources focused on taking care of employees so they can take care of customers. While that still sounds warm & fuzzy, nonetheless it’s critical because if your employees don’t feel valued, neither will your customers!

Appreciation, involvement in the process, being part of a company's dialog and success, the creation of a community, translates into loyalty by the employee and profits to the company. 

And this is not a new concept.  It is a forgotten concept,  I know because I experienced it in the companies I worked for in the 80's. I worked at not one, but two, companies who had office happy hours every Friday afternoon hosted by the president.  One company president drove his motorcycle through the company offices giving employees rides.  This same company handed out turkeys to every employee at Thanksgiving, held birthday parties for each employee.  Ten year anniversaries were celebrated with a one week trip to London and a stay at their corporate apartment with show tickets.  Was this a small private company?   One was small.  The other was the U.S. headquarters for an international corporation where I worked for 3 years.  This was a time before executives took $50 million dollar bonuses while telling their employees the company can't afford to give COLA raises while simultaneously reducing their health benefits. When I left the company with the motorcycle-riding president, it was the only time I actually grieved for 'family" because the company invested in creating a culture within the workplace...a culture the employees didn't want to leave.

And I believe the companies I worked for are being described by Ms. Sterchik when she states:

I find it ironic that many companies who do Internal Marketing well aren’t necessarily aware that they’re using Internal Marketing. These are companies with a workplace culture and operations committed to the value of both customers AND employees.

If a company who has employees really believes they can skip this step and retain employees, either they are paying their employees so well they can't afford to leave or they are deluding themselves.

Despite different generational attitudes in the workplace, companies will still need to engage their employees. And that’s where Internal Marketing comes in – enabling organizations to communicate and reinforce a sense of common purpose, a sense of belonging, and a sense of being part of something special, particularly in workplace that’s becoming increasingly insular. Internal Marketing will continue to be relevant as a ‘high touch’ people-centered management approach in a ‘high tech’ world.

So, you see this isn't a generational mandate unique to the Millennial.  This is just good business.

This new generation can't work within an environment which does not respect their goals and values, a management hierarchy which can't conceive of, never mind nurture, a new way of doing things which actually benefits the company and the clients foremost, If law firm managers, even solos looking to hire an associate choose not to recognize this but, instead, behave antagonistically, then they are going to lose the talent they have and certainly not attract new talent.  If this talent strikes out on their own without regrets why are the law firms so mad?  Why should these new lawyers have to take 20 years to figure out they don't want to waste their time at that law firm?  There is 'paying your dues' and then there is selling your soul.  This generation didn't create disloyalty.  It was the previous generation of employers who were disloyal and dishonest and gave this new generation permission to say, 'screw you.'

So, there are some mea culpas to be made by employers.  There are some steps they have to take to create environments to attract today's young worker.  Today's generation is suspicious and self-serving because they've learned no one is going to look out for their best interests better than themselves (or their parents.)

This generation grew up (and is continuing to grow up) connected to a vibrant and diverse community through technology and they can no more leave this connectivity when in the workplace then they can leave their left arm.

Employers should capitalize on this connectivity and the freedom they, too, can experience released from the confines of the 9-5 workday and sterile cubicle and harness the additional strengths of the millennial worker instead of straitjacketing them.  And when there is a strong work community it mitigates the needs for a rigid caste system. The caste system is least for this generation.

And that is why I believe, more and more lawyers will strike out on their own.  Millennials will be more inclined to pursue their entrepreneurial bend, especially in the law.  And you will see those who have worked so hard within the current system who get the boot or are not rewarded in ways which are meaningful to them more inclined to become solo practitioners.

Then consider the economic times we are facing.  In a time of uncertainty, the direction this world is going, extraordinary debt, health care in crisis, global warming, endless war...there is a certain 'live for the moment' feeling which propels them to say, 'if this isn't working for me, I'm outta here.'  They don't just say, "time is precious."  They live and work knowing time is precious.

Rigidity and lack of consideration for the mindset of this generation is a recipe for economic disaster for businesses of all stripes. Law firms are definitely not immune.

As a solo, there may come a time when you may choose to bring on an associate.  Remember this.  And remember why you chose to go solo, the freedom to control your own time, your own destiny. You realized you'd rather be responsible for your own financial security and you have faith in your abilities to do this.  And when you made (or make) the decision to go solo didn't you, regardless if you are a Baby Boomer, Gen X or Gen Y, basically say the very same thing?  I think the phrase was 'screw you.' :-)

April 29, 2008

Don't Most Small Businesses Fail?

I am so often asked, "don't most small businesses fail?", that I was both delighted and dismayed when I read this recent post by Case Western Reserve educator and author Scott Shane on Small Business Trends in an effort to bust myths surrounding statistics on small business successes and failures.

Proportion of New Businesses Founded in 1992 Still Alive By Year.Small business failure rates over 10 years - United States - by Scott Shane

These are the averages. There are considerable differences across industry sectors in business failure rates (see Figure 7.1 on page 113 of Illusions of Entrepreneurship), which is pretty interesting and important. But I’ll have to leave a discussion of what those are and why they exist for another blog post.

I have not read the book this chart comes from (the post just came out on Monday) but in the comments section I took issue with the implied assumption all businesses which close are considered failures.  No, they are closures and for this statistic to have meaning failure needs to be defined with objective criteria.

We don't know why they closed.  Businesses don't always close because they 'failed' which in my book means the business owner wants to keep the business open but is unable to sustain business or herself financially, heading either towards personal and/or professional bankruptcy.  Failure in my book does not include sustaining yourself and the business but needing to close because of a move, a new venture, selling then the new owner closes.

Scott replies to my comment that in follow-up the SBA surveyed those who closed their businesses and asked them if they considered their business "unsuccessful' and 70% said they would.  This, again, is subjective.  What was their definition of success?  I'm not playing word games here.   There was simply no objective criteria used to determine if the business failed factually or if the owner had dreams that were left unfulfilled by the business and therefore he deemed it 'unsuccessful'.

So, when a solo says to me, "don't most businesses fail?' do you understand now why I can't answer this.  And as far as seeing more specific rates across professions (hopefully including the legal profession), we have to wait for Scott to post this on Small Business Trends soon.

However, when we hear the statistic "more than half of all new businesses fail within 2 years" whether we call it failure or closure, we now know this is not least by these numbers.

If you are considering opening your own solo practice, do not use broad brushed statistics to make a personal decision.  Statistics will help you consider the challenges you may face, but that is the only way you should use them.  If challenges are identified then your plan to succeed must address those challenges.

Remember, any statistic tortured long enough will eventually tell you what you want to hear. It's your choice to listen...or not.

April 05, 2008

Big Law Preparing For Hottest Practice Area - Bankruptcy

Very often I get e-mails from young lawyers asking what practice areas they should pursue.  Invariably, I suggest they learn bankruptcy.  I'm ususally met with, "I'm really not interested in that...or the laws are too tricky."  Well, quite often when you are starting out you have to go where the opportunities are to leverage yourself for those areas you ultimately do want to practice.

In this article from the ABA Journal, Big Law declares bankruptcy is going to be 'hot' this year.  It feels awkward to declare financial failures as the 'hot' new practice area but if you've been reading this blog for any length of time you know I have been strongly suggesting new lawyers get into bankruptcy as far back as November 2006.  The reason: to encourage you to get in front of the wave so you had some expertise when the tsunami hits.  And it's hitting. 

When the bankruptcy laws changed many lawyers got out because they didn't want to adapt.  This left a void  and a tremendous opportunity for new lawyers.  I don't believe it is too late to start learning because sadly we will be seeing a significant rise in bankruptcies for many years to come.

Start learning today. You will be busy and you will be helping people at a very critical time in their lives.

Related Links: More Reasons Bankruptcy is a Good Practice Area for Solos  (You will fined numerous links in this article including a guest post by Richard Maseles)

March 30, 2008

"Tip of the Week" - Foreclosure Fairs

This is a quick tip for those who practice bankruptcy or are investigating foreclosures.  Consider participating in the new foreclosure fairs...fairs designed to help people prevent foreclosure and populated with lenders, realtors, accountants, counselors and lawyers.  What a great way to meet potential clients for not just foreclosure, but bankruptcy and real estate.

More and more family friendly foreclosure fairs, where mortgage lenders and counselors offer advice to desperate homeowners, are taking place in Miami, Philadelphia, Boston, Columbus, Ohio, and other hard-hit cities and towns across the country. This month began a series of "Homeownership Preservation Forums" sponsored by HOPE NOW, a collaboration of non-profit, corporate and government partners, including the Housing and Urban Development.

The fairs help homeowners who may be too paralyzed with fear to pick up a phone and call their lender as they fall behind in their mortgage payments and risk foreclosure. "Studies show that homeowners respond more quickly to community and non-profit groups than to lenders and banks," HUD Secretary Alphonso Jackson said in a recent speech in San Francisco.

Organizers of the Merced fair had worried that attendance would suffer from too little notice; instead, they were overwhelmed by the response. That same day, another 200 mobbed a fair in Los Banos, an old farming city of 35,000 residents, also in Merced County. Five percent of Los Banos' 10,000 houses have already foreclosed and another five percent are expected to foreclose in the coming months, Cardoza said.

I think lawyers with particular expertise to assist those with foreclosure, avoidance of foreclosure and/or bankruptcy might very well offer tremendous assistance while gaining clients and networking among those who can refer you business.

Check out the article here.

March 21, 2008

In a Weakening Economy Will Clients Trade Big Law for Innovative Small Firms?

I related to this article, "In a Weakening Economy, Americans Swap Steak for Chicken" because less discretionary income affects all purchases, including legal services.   It's called, "Trading Down."

Stung by the housing slump, tightening credit terms, and rising inflation, U.S. households are finding ways to cut back, putting a damper on the consumer spending that is the driving force behind the economy.

Retail sector analysts call it "trading down" when consumers seek out cheaper alternatives, and it is increasingly evident across chain stores and restaurants. Even gasoline consumption has slowed in recent weeks.

"With the burdens of the housing downturn broadening under the weight of tightening financial conditions, coupled with surging energy costs, 'trading down' and 'trading in' behavior should spread, especially as the labor market weakens,"

But unlike cattle farmers, who will have a hard time trying to become chicken farmers to save their business, solos should not trap themselves with one practice area, pricing structure or crushing overhead.

If you are married to one niche or pricing structure or have so much overhead you cannot afford to learn other practice areas or innovate with pricing models or packaging of your services then you are making a critical mistake.  (There are exceptions such as you are a 'lawyer's lawyer' meaning other lawyer's are your clients and they require your special area of expertise or you are already established as the go to person for a particular niche or you are in a life and death practice area where clients will sell their homes for your services.)

Others can and have argued with me on this point.  They say law is so complex you cannot be good at multiple areas.  I don't share their opinion.  I think you can be highly competent in two to three areas of the law even if ultimately want to only practice in one area of law.  But going into business for yourself and sustaining yourself requires you to be adaptable and talented and ready to do what you have to in order to sustain your practice.

Use Big Law as an example.  When a Big Law firm realizes the economy is changing they simple divest themselves of the associates working in the practice they've determined is no longer profitable.  They don't go out of business. Similarly, as a solo you need to divest yourself of unprofitable practice areas, not go out of business.  This means you need to be competent in more than one area or willing to learn quickly in order to not practice an area of law where clients are few or incapable of paying you.

Or, in the alternative, if you want to stay in your particular practice area you need to be prepared to change how you deliver services to work with clients who are now buying chicken instead of steak. (Yes, everybody and their brother talks about premium pricing, selling your value, etc.  It's valid.  As Big Law divests non-profitable practice areas there are still those steak buyers who now have nowhere to go. But if every lawyer is only going for the steak crowd, it becomes a buyer's market. Remember, there are alot of chicken and fish eaters out there as well as vegans who would make excellent clients.)

A new solo, (and many experienced solos) need to adapt to the economy, not expect the economy to adapt to them.  It's also not your gross sales which matter.  It's how much of each dollar you take home.  So, imagine finding a way to meet your client's needs through innovative delivery of your services by cutting overhead, providing pricing structures which work for the client and actually netting more of each dollar.  This is a business model you should be striving for...bad economy or good.

March 12, 2008

High Demand and Growth Areas In the Law - Opinions

From Law is Cool comes this blog post of opinions from Big Law to solos as to the growth practice areas for the future.  Much turns on the aging of our society and technology and energy.  A very nice collection of insights.

Here are my thoughts on the subject if you are interested.