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The Recession and your Law Practice

Turn on the nightly news and chances are the lead story is the economy, and the endless speculation about whether we are, or are not, in a recession. Obviously, with oil prices continuing to climb, the dollar continuing to weaken, and the housing market not yet hitting bottom, the question of whether we are “technically” in a recession is really academic.

The real question (for this audience) is what does the current economic state actually mean for the boutique and mid-sized law firms who desperately need to invest in the growth of their practices?

A lot of wisdom can be found by listening to Warren Buffett, the “Oracle of Omaha”, and the world’s second richest man. In a recent interview, Mr. Buffett said the possibility that the U.S. economy will go into recession will make no difference in how he runs his Berkshire Hathaway empire. “We don’t spend any time talking about where the economy is going. We have a basic belief that the country will do very well over time.”

I point this out, because the propensity of many law firms (and other privately-owned businesses) is to make investment decisions based on the economy at that specific point in time, and make these decisions using emotions.

“The market is doing poorly and my phones aren’t ringing. I can’t possibly spend money on marketing. I’ll focus on marketing when the economy picks back up.”

Unfortunately, this thinking can actually exacerbate an even more dramatic downward spiral. In most markets across the Country, competition among law firms continues to grow and the successful firms over the long term are the ones who have aggressively built their brands and captured the larger market share.

These firms, like Warren Buffett, don’t stop marketing because of a slow economy. They understand that recessions bring opportunity. While other law firms may be in retreat mode, successful firms use the opportunity to redouble their efforts, build their brand, and ultimately pick up new clients and new market share – market share that was vacated by those firms in retreat.I’m not saying it’s easy, but Mr. Buffett didn’t build his empire by only investing when the economy was growing. You need to stick with your plan. Perhaps, you focus a little more on lower cost marketing initiatives, such as PR, blogs, e-Newsletters, etc., but you can’t stop your marketing efforts. As an added bonus, since everyone is feeling the same pinch that you are, you may even be able to find some deals and pay lower costs for some of your marketing efforts, because right now, everyone is willing to negotiate.

When the market does turn around, you’ll be far ahead of those firms who elected to sit this recession out.