Why We’re Gloomier Than The Economy

A recent article in the Washington Post, Why We’re Gloomier Than The Economy, addressed the interesting phenomenon where perceptions of a slow down in the economy are much greater than reality. While consumer confidence is at 30 year lows, the traditional metrics used to measure misery are not in the basement. In fact, they are at mere fractions of what they were in 1979, 1991 and 2001.

I have been running into this recently at a number of law firms I have been visiting. In fact, back in March, I actually had an AmLaw 50 firm ask for a pricing discount on a contract due to "the economy". I guess looking down at your shoes glumly while walking the marble floored halls of your Park Avenue law firm can be depressing.

I am not buying it. It is just another excuse for inaction and preservation of the status quo that is rampant in many risk averse law firms.

There have been changes in the level of business to be sure. In fact, some people are complaining that the typical counter cyclical practices like bankruptcy and litigation are not picking up like they usually do. Well, news flash folks, the leaders in these areas are doing just fine. Which ones? Hmmm, maybe the ones that have invested in their brand, people, client service initiatives and infrastructure during the boom years.

Look how smart you marketing people are.

Those firms that have not done the things I mentioned above are going to find this next two years a bit rough. It is not that many of them will go out of business from lack of work. However, they may lose a number of key partners who defect to the forward thinking firms that continue to grow profits per partner (PPP) in a downturn. THAT might knock them out of business.

In a world characterized by access to anything you want to buy via the Internet, instant answers on Google and endless supply of viable choices for legal expertise, choosing to do things the way you always have is just not a rational option. Taking a break when it is tough is not an option. And, using a "slowdown" as a reason for pulling back instead of grabbing market share is shortsighted (to put it nicely) from firms still boasting a PPP that would make their own mother’s blush.
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  1. Darryl – welcome to the Cooler. Your thoughts are provoking, and that’s what we like around here.My firm, for one, is increasing our spend. We’ve just hired Wicker Park Group for client service interviews — a program our firm has never done before. I’m spending money to enhance our website, and our partners are on the road constantly to visit clients, attend conferences, etc.I have been at firms whose first thought in economic down turns is to stop spending money. For some reason it’s never, “how do we bring in more, new, better money?” The firms that focus only on whose budget we can cut will end up losing in the end. They will drive people out, not just the partners, but the professional staff. They will lose market share to firms that will spend money to make money. Lets face it, it’s really not fun being the director of marketing or CMO with no budget to spend.

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