Business Development Opportunities For Law Firms In 2008

Admin — Mon, 07 Apr 2008 07:00:08 GMT

An article in the Tampa Tribune (hat tip: Estrin Report) reports that foreclosures are so high in some areas that firms are hiring as many as 200 additional staff to handle the workload. Foreclosures in Hillsborough County, Florida in February more than doubled the amount from February 2007 and is more than 5 times the foreclosures from February 2006. This reportedly is putting a strain on the "assembly line" approach firms here use to push these cases through the system.

This is an extremely worrying sign. Granted, the investment houses purchased in Florida may not be the primary residences of the owners. However, their investments were lost and many lost their savings in the process.

This is more evidence that the 2008 Client Advisory published by Hildebrandt and CitiBank is off the mark. There does appear to be offsetting legal work to be found. This is reassuring news to law firms, especially those who have expanded practice areas, that they may not suffer what the Client Advisory termed "the perfect storm" where all areas of practice trend downward with no offsetting surge of work.

However, it is likely that Congress will act to slow foreclosure activity on primary homes sometime this year. Though good news on the surface, Congress isn't very effective in softening the effect of a market correction.

Our economy is volatile. Opportunities for work will be everywhere but not necessarily in areas traditionally served by your firm. Firms need to prepare to be innovative in their business development approaches this year to take advantage of the continued fall out from the several market corrections that have happened and will happen in the coming months.

We have begun taking submissions for the 2008 Law Firm Economic Survey. If your firm is interested in participating, please contact Brian by clicking here.

More Signs of Recession For Law Firms in 2008

Admin — Thu, 31 Jan 2008 08:00:58 GMT

Rob Millard's blog Adventure of Strategy takes a second look at recessionary pressures against law firms in 2008. He links to a new Client Advisory from Hildebrandt and CitiBank that is a depressing read.

According to the Advisory, 2007 started out with high expectations and ended in uncertainty. Litigation doesn't look as good since some companies appear to be settling out of potentially protracted litigation. Merck was used as the example with their recent announcement that they were settling their Vioxx claims. (Of course, news yesterday that Merck is back on the defensive may dampen that bleakness and provide hope for trial attorneys on both ends of the aisle.)

The Advisory warned of the "perfect storm" in which finance, transactional, and litigation work have all trended downward at the same time, with no offsetting surge in work related to the economic downturn itself.(p 2)

Breaking down the reasons for their bearish outlook:

The cost of leverage. The Advisory compares the economic downturn of today and 2001 and notes that the relatively high level of equity partners in 2001 in firms allowed for the use of leverage to increase profits. De-equitizing partners and increasing the barriers to equity partnership have left firms with little wiggle room to work in this economic downturn. This may be true for large firms, but it certainly isn't the case for mid-size firms who are still very much top-heavy according to the 2007 Law Firm Economic Survey from LexisNexis. If leverage was a method of bailout for large firms in the economic trough in 2001, then mid-size firms stand to profit from utilizing it in 2008. This pre-supposes firms have the will to make the admittedly difficult decisions in the more personal environment of the mid-size firm. It stands to reason that a struggling business that wants to survive will make the hard decisions to prevail in hard times. Interestingly, the Advisory argues the negative impact of increasing leverage in the firm that may necessitate a revisit to this subject. In our surveys, increased leverage has been correlative to increased income. Is the Advisory making the argument that you can be over leveraged? Is utilization of associates not the only factor?
Realization Rates. Realization rates are lower now than in 2001, placing additional pressure on increasing rate. Which leads to the next point -
Client push back. Clients, in spite of firm predictions of increasing rates, are placing price pressures on firms that place a premium on firms who are efficient at providing legal services. That, combined with lower realization rates, hurts profits.
The Challenge of Laterals. There are more lateral hires now than in 2001. According to the Advisory, laterals are the first to leave the firm when hard times hit. Perhaps for similar reasons, perhaps not, respondents to the LexisNexis 2007 Survey confirmed that they have more success with new hires than with laterals.

Lack of Offsetting Practices. It's the "perfect storm" of no transactional, litigation or finance work (although I personally think that may be a bit overstated).

Is this a pre-warning? Click here to read the Advisory in its entirety.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

Make More Rain : technology, economic outlook

Business Development Opportunities For Law Firms In 2008

More Signs of Recession For Law Firms in 2008