The business press relentlessly reports recessionary news these days — layoffs, stock market volatility, speculation regarding further interest rate cuts by the Fed, reduced corporate earnings, the dot.com crash. We may not be in a recession (yet); economists require two consecutive quarters of negative growth in GDP for a down-term to be defined as such. But we clearly are in a slowdown. Many law firms today are finding a slowdown in their intake of new matters, reduced utilization, slower payment by clients, increasing receivables and slower revenue growth.
Law firm management is acutely aware of this situation and attempting to deal with it in a timely manner. In some firms this action takes the predictable form of hunkering down, cutting back on new hires and cutting costs in non-personnel areas — marketing, technology, travel and entertainment, communications. Other firms view this as an opportunity to increase market share, upgrade staff and client base, add and grow some practice areas, at the same time de-emphasizing or eliminating others, and through it all growing both revenues and profits.