In recessionary times, the questions are always the same:
“Is my job safe?”
“Is my firm going to survive this?”
“Is this the best or worst time to consider a move?”
Two historical factors and one new factor, provide the answers.
Practice Area
The first and most obvious factor to consider when evaluating the security of your position, is practice area. Certain practices will decline or even be eradicated for years. The key is to evaluate and accept the fact that you may need to make minor or even drastic changes in order to survive the COVID and Post-COVID era.
I spoke with Richard Newman, a patent attorney here in Las Vegas.
“As a small intellectual property boutique specializing in new gaming-related technology, COVID-19 stalled new work for the tech we typically addressed. In order to adapt, we pivoted slightly and are now doing more patent work in online gaming and non-gaming technology.”
While Richard was able to make a small change, one of my current clients is a partner in the Resorts & Hospitality department of an AmLaw firm. He spoke to me on the condition of anonymity.
“My work has literally been wiped off the face of the map. I have a couple projects where the funding is already in place but new business projects are nowhere to be seen.”
My advice to him was the same as I gave to real estate attorneys in 2009: Pivot with a pal.
My advice to him was the same as I gave to real estate attorneys in 2009: Pivot with a pal.
Get together with a bankruptcy partner in the firm (especially a service partner who is motivated to share origination credit) and mix brands to become a hyper-niche in “Resorts & Hospitality Bankruptcy Specialist.”
Clients tend to prefer attorneys who understand the idiosyncrasies of their specific industry. While this and other strategies may not always be successful (a great deal depends on the attorney’s ability to market effectively), having any strategy in place is better than inaction or denial.
Younger attorneys should also evaluate whether they should pivot. Associates in low or zero demand areas should pivot as quickly as possible – even if it means taking a severe pay cut.
We currently have a third year corporate associate, interviewing with clients for a position as first year attorney in bankruptcy at one firm, and health care at another.
Cost Benefit Analysis
The next factor in determining job security is the Cost Benefit Analysis. How much you cost vs. what you bring to the table.
Rainmakers are always safe. Attorneys with client base (that did not get wiped out by the recession) of even just a few hundred thousand dollars, have options. Those with more, have more options. If worse comes to worst, they can take their clients to another firm or start a firm of their own.
The next safest group are the very best and hardest working, junior associates. Someone is going to have to do the grunt work and they’re the cheapest labor in the firm.
So who is living under the Damocles Sword?
So who is living under the Damocles Sword? Other than a few service partners or senior associates in the right practice areas, the logical choice for layoffs has always been mid to senior level associates, Of Counsel and service partners. The math is easy on this one. They cost the most but don’t generate revenue.
Recessions always illustrate the same cardinal sin: No one has the right to forego marketing efforts.
On the other hand, if you’re in a high-value practice such as health care, bankruptcy or cybersecurity, you currently have the Midas Touch and the choices that come with it. You have a real choice as to whether you want to accept a pay cut or move elsewhere and get a raise.
I have received calls from partners who have been underpaid for a decade and now that their practice area is hot, are being asked to “be a team player.”
At a time when these partners could be increasing their client base, they’re being asked to cut or give up their marketing budget. While I do believe in loyalty and law firm esprit de corps, cutting the budget of say, a bankruptcy attorney right now, displays a complete lack of business acumen.
If you’re in a high value practice area, now may actually be a good time to look around, because you are more valuable than you have been in nearly a decade.
However.
If your firm has always treated you equitably, then it’s time to double your marketing efforts and help keep the ship afloat.
I spoke to Leslie Katz, a Regulatory, Blockchain & Fintech Partner at the national law firm, Clark Hill.
“While other people are in a holding pattern right now, we’re busier than ever. Especially given that blockchain is now evolving to provide enhanced offerings for cybersecurity, which can include thousands of storage repositories for data, expansion of digital tokens and growing use for enterprise solutions”
She continued.
“While certain brands have nascent footholds in emerging practice areas such as mine, it’s going to take more than brand to capture market share in the Post-COVID Era. Clients are going to look for firms that offer a more value-centric model like ours, beyond just delivering a legal product.”
Corporate Darwinism
Which bring us to the third and new factor: Corporate Darwinism. The myth that in order to succeed in a high-end business practice, you need to deal with the politics, bureaucracy and lifestyle at an AmLaw, has been slowly disproven for years now. COVID is accelerating that.
AmLaw’s and other firms that ignore Alternative Legal Service Providers (ASLPs) and the explosion of Virtual Law Firms are going to be in for a rude awakening.
John Lively is the Managing Partner of Practus, a virtual law firm that in two short years, has grown and gained a footprint that reaches from Los Angeles to Boston.
“We were built for this. We have no debt and none of the crushing overhead or long-term leases that were required in the 20th century law firm model.
“While the AmLaw’s our attorneys once worked for are laying off hundreds of attorneys, we’re poised for strategic growth and have begun implementing an aggressive plan to achieve that goal. The majority of attorneys we hire will see no decline in their pre-COVID incomes and many may see an increase.”
… we’re poised for strategic growth and have begun implementing an aggressive plan to achieve that goal.
The COVID Era has legitimized the virtual law firm concept overnight.
“When I’m on the phone with a client, I’m just as likely to hear their dog barking as they are mine.” Lively said. “No one cares anymore. They care about the quality of legal product and the value rendered.”
If your firm is operating under the “20th Century Business Model” it’s critical to pay close attention to the decisions being made by management. If they aren’t implementing specific strategies and changes right now, they’ve already fallen behind.
It’s not the biggest firms or most established attorneys who will survive. The attorneys and firms who are most capable of adapting, will become the next dominant species in the legal market.
Comments 6
Wise words
Great perspective John. The reference to a “cost benefit analysis” starting point is definitely key. That seems to be how clients are viewing their changing needs as well.
YES! Firms, ignore this advice at your own peril. I just shared this article with our entire management team as just one more arrow in our quiver to survive and thrive beyond COVID.
Excellent article!
The virtual law firm leaves many of the risks and frustrations of the old practice model behind. The uncertainties of COVID simply accelerate the mandate to transition.
Excellent article which gives great suggestions and insight on how to adapt in the rapidly changing law industry.