Paul Ward 0000-00-00 00:00:00
Bubbles Our town is no stranger to bubbles. Whether it be real estate or “dot coms,” we have not been immune to the inexplicable and reality-defying rise of certain sectors, and the crash that happens when things go pop. Some have said that the run up in the world of law...a rise in fees and profits that went on for more than a decade, was its own form of slow rising bubble. As the high-rises across the country filled with lawyers — most with plenty to do, there was a sense, as there always is in a bubble, that things could only go up and up and up. Now, things are different. Law has had more than its share of downsizing, layoffs and buyers demanding more reasonable fees and more creative solutions. Some are hiring less, some companies are doing more legal work in house. Was it a bubble? Has it burst? The truth of the matter is, it doesn’t matter. Whenever there is an unnatural or seemingly endless rise in the demand or price of some good or service, the smart money works to find the real value, is wise in its approach, and adapts as circumstances change. Those who crash the hardest are those who do not let themselves see the warning signs. Instead of waiting for the next few years to tell us whether there was a legal bubble and whether it has been burst, the smart move is to get rid of your own hot air first — burst your own bubble. Then you will be ready, come what may. How a lawyer bursts her/his bubble. 1) Remember the lawyer’s role in commerce. When you are working in one of the top-paid professions in the country, it is possible to be lured into thinking that the commerce you are engaged in revolves around you. It doesn’t. It revolves around the client. More than ever before buyers know they can find a lawyer who will listen, respond and treat them as if they are the most important thing on earth, understanding the law’s role and the lawyer’s role as solutions provider. If that isn’t you, they will move on. 2) Tie price to value, not to your needs. Structure your practice smartly. Cost-plus pricing in a down economy only invites scrutiny. Clients are punishing inefficiency. If what you offer is high value, certainly price it accordingly, but remember the days of rate increases simply to cover more expensive digs and of having the client pay for you or your associate to learn are gone. Structure your personal practice and your firm to maximize efficiency so you can get a good price based on value. This also means managing needs so they don’t skew your “client first,” perspective. We have seen it in clients and business many a time, the person with a nagging financial need is not in a position to bargain, negotiate or advise optimally. 3) Be bold and consistent in business development. If there is/was a bubble and it is/has burst(ing), than this is either the greatest time in the history of the profession to grow market share, or it’s a full on crisis. Look at it as the former. Old ways and old guards are in the same boat you are in. Buyers are indeed more open to hear about innovative approaches to matters, management, and cost reduction, and are less likely to hold to “what we have always done.” Now is a great time to seek out those who need solutions, listen, learn and provide those solutions. 4) Stay flexible. This is related to pricing to value as opposed to cost-plus. The more encumbrances that limit the freedom to change, the more likely that for you or your law firm there is a bubble and it is going to go bang. Consider the spate of firms that have bitten the dust. Think of all the long term commitments that tied their hands when they needed to be able to be creative and adaptable. Limitations in flexibility can range from pay guarantees to poor technology sourcing, poor management structure, and leases. Take for instance, marketing. Most firms are using the same model for marketing departments that they used in the 1980s — although the world has changed dramatically. Much can be done using technology, and lawyers can harness vast business acumen made more available than ever before. 5) Grow strategically. If law was in a bubble, than nonstrategic growth is one of the symptoms. But with the shuffling of the marketplace, smart combinations have never made more sense. Complimentary practices, forward-looking positioning, and strategic geographic penetration are great reasons to grow… while growth for growth’s sake, is not. Strategic individual growth is crucial. If your practice has not come back since the 2008 decline and you have not developed at least three new ways to serve clients with solutions they need now, now is the time to make that a top priority. Looking down the road at upcoming legislation, anticipating likely developments in areas of your expertise, or taking a look at related areas of practice which clients may need and which you can develop – all are timely things to do….yesterday. Bubbles are usually best evaluated long after things come back down to earth – so it is always hard to know if you are in one. The trick is for today’s lawyer? – be down to earth starting now.
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