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How to Recession Proof Your Law Firm

How to Recession Proof Your Law Firm

There’s no question the United States economy is in choppy waters. With the Fed raising interest rates to tame inflation, lending and financing markets are bound to tighten, which in turn may lead to a recession as businesses find it harder to expand or even operate, and consumer spending drops due to diminished credit. Small businesses are particularly vulnerable, as they tend to have lower cash reserves and slimmer margins than larger corporations— and this applies to many law firms as well in this blog we’ll give you a few tips to recession proof your Law Firm.

However, a recession, or even simply a slowdown in economic growth, also creates opportunities for attorneys, if they’re prepared to respond to the recession mindset of current and prospective clients if the economy does indeed begin to shrink. Remember that a perennial demand for legal services is generated by the ‘Four Ds’— Death, Disability, Divorce, and Disagreement— and these needs of your clients are largely recession-proof. The same goes for criminal defense (which you can think of as the fifth ‘D’). Moreover, while clients may become more price-sensitive in a recession — because their revenue or income is dipping as well — there are ways to rethink your billing structure to make it more palatable to clients who find themselves low on cash or credit.

Here are some strategies to recession-proof your practice, and possibly even grow it in times of economic turbulence.

Market More, Market Smarter

When an economic slowdown occurs, your competitors are likely to reduce their marketing spend, and attempt to get ‘more bang for the buck.’ What this often means is an increase in ‘low grade’ online marketing— non-optimized social media and Google Ads campaigns, poorly-targeted emails, and so forth. Many firms will cut their expenses by ceasing to work with a marketing agency. Don’t do this— in fact, spend more if you can. And definitely spend smarter.

Here’s why: the less effective your competitors’ marketing is, the more value you get from each dollar you spend on a well-strategized marketing plan, because the more likely you are to convert a new client when you’re competing against low-quality marketing from other attorneys. You might even be able to poach clients, who naturally might look for alternatives in lean times. If your competitors’ websites are too long and clunky, your well-designed and attractive website will stand out more to prospective clients. When your competitors are parting ways with their marketing agencies to reduce expenses, the value to you of expert marketing increases. For instance, an SEO strategy to raise your search placement will be more effective when your competitors are focused on cutting their marketing costs and investing less in SEO.

In terms of marketing, think of a recession as an opportunity to ‘buy low’ for greater value, instead of spending less. Here’s a good guide to the underlying dynamics of recession marketing

Offer Subscription Services

One undeniable truth of a recession is that clients and customers become more price-sensitive. This is particularly true when it comes to choosing a law firm. The fear of being hit with a higher-than-expected legal bill increases. Nonetheless, clients will still need lawyers. Remember the ‘4 Ds’. Many legal needs can’t be deferred to the future.

That’s why we anticipate that a recession will lead to the growth of legal subscription billing models. By offering your clients basic legal services for a fixed subscription fee, you’re presenting them with a much more predictable spend, which has enormous emotional and practical appeal during tough economic times.

What’s more, everyone knows that upselling an existing customer is easier than acquiring a new one. Subscription services for basic legal matters like employment contracts, lease agreements, and other routine needs establish and fortify relationships with clients which makes them likely to come to you when they have additional billable needs.

One400 has helped several firms determine what kind of subscription services they should offer and how to set them up. 

Offer Fixed-Fee Billing

Another approach to billing which works well in tandem with subscription offerings is billing per matter rather than per time spent. Again, on a psychological level, in tough economic times, people want certainty. They’d much rather know how much they’ll have to pay an attorney to handle a given matter rather than live with the constant worry of a costly bill. And even if per-project billing doesn’t decrease their legal expenses, they’re likely to feel better about their experience as a client, which makes them more likely to come back.

Here’s a good guide for how firms can approach fixed-fee billing and other alternative arrangements.

Focus (or Diversify) Your Practice Areas

As discussed above, the need for many legal services isn’t reduced by a recession. But for some practice areas, demand does fall. In fact, some areas tend to see increased demand, such as bankruptcy and employment law (due to wrongful termination suits, for instance, as many companies will trim their payroll). 

This means ensuring that you and your colleagues offer the right balance of practice areas, and anticipate potential shifts in demand. What this entails specifically is different for every firm, as it depends on your current situation and that of your competitors. But it’s worth thinking about in advance. Maybe now’s the time to bring in a new bankruptcy lawyer, for instance. You should also consider cross-training your attorneys in other practice areas.  Even if we avoid a recession per se, it’s almost beyond question that economic growth will slow in response to the recent steep hike in interest rates by the Federal Reserve, so the demand structure for legal services is virtually certain to shift to some extent. Forward-thinking firms are more likely to thrive in times of change.

Leverage Economic Conditions To Your Benefit With Outside Contractors

A recession or economic slowdown is likely to spark wage decreases. Most law firms outsource some services, and when outside contractors have fewer work opportunities and lower salary expectations, you can get more value for your dollar, as in the case of marketing as discussed above. For instance, if your firm regularly uses an outside private investigator or a forensic examiner, now might be a good time to offer them a guaranteed number of hours at a lower rate. They’ll benefit from the guarantee of steady work, and you’ll benefit from lowering your firm’s expenses.


You’ve probably detected a common theme in these suggestions: be willing to invest in your firm during tough economic times, rather than being excessively concerned with maintaining cash reserves. That may seem counter-intuitive— shouldn’t you try to save money and curtail spending in tough economic times?

Well, yes, to some extent. It’s always wise to have enough cash on hand to cover payroll and other expenses for 90-120 days. Beyond that, your firm should probably be investing in growth via some of the avenues discussed above. Otherwise, you risk stagnation while the overall market shrinks, and some of your competitors make these kinds of investments and surpass you.

The real key isn’t to save money, it’s to act quickly. Recessions actually begin 9-12 months before they’re officially declared as such by the National Bureau of Economic Research which monitors the national economy. Nine to twelve months is too long to wait to take action. The best practice is to decide in advance what indicator(s) your firm will interpret as recessionary— perhaps a sustained reduction in new client inquiries, a rise in foreclosures in your city, and/or other data you can monitor. If and when those indicators hit the thresholds you’ve determined as meaningful, take action. Not only will you survive a recession— you will likely actually thrive.

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About the author

Allen Rodriguez Allen Rodriguez is a legal product development strategist who has been serving the legal industry for over 21 years. Over the course of his career, Allen has built a reputation for creating innovative legal services products as well as developing highly effective law firm business and marketing strategies. Allen is a valued speaker on the topics of law marketing, legal services product development, and future of law issues.

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