Maybe you’ve heard there’s talk of a recession.
We are coming out of one of the hottest legal markets ever into a market that is right now, well, lukewarm. The number of associates in the market pretty closely matches the available positions.
So, the years of limitless salary increases are probably over, for now, anyway.
What this means for partners is more nuanced, but the recession, even the expectation of a recession, is clearly having an impact. The extent of that impact depends on you and how important you are to the firm.
For rainmakers, the recession is optional.
First, is it a recession, and will it affect law firms?
On the topic of “is it a recession?” the answer is, who knows? There are plenty of arguments on either side of whether we are in a recession, none of which I want to go through here – we’ll let the economists sort that out.
We are dealing with the expectation of a recession, which is very real. In Jerome Powell’s big speech in August, he suggested the Fed would keep its foot on the brakes until they see a sustained period of below-trend growth. That sounds like code for “recession” to me.
Whatever it is, it is having an impact.
The law firm response to date has been a quiet headcount reduction and somewhat less excitement around hiring. So far, the tea leaves don’t predict massive layoffs, but we will likely see a slow decrease in headcount through attrition and more focused attention on performance reviews.
The most significant way this will be felt in law firms, at least in the short term, is the shifting power dynamic.
The impact of the recession on power in a law firm
The significant change that we will see is a power shift.
Take returning to the office, for example.
After the COVID lockdown forced everyone to Zoom, many people have been reluctant to return to the office. All those firms with big shiny offices have wanted them buzzing with juristic activity, but many people have dragged their feet.
The offices have stayed empty, and firms have been powerless to force the issue because the employees, lawyers, and staff, have held all the power. The market was unbalanced to the extent that you could work from Ohio, dial in through DSL, and earn a New York salary.
But with some market balance, that is changing.
Firms are now finding people willing to come into the office. And when people working at a firm begin to fear layoffs, suddenly going into the office doesn’t seem so bad. If you were the one to refuse to come to the office, you might be the first to go.
Rainmakers, though, can still call a lot of the shots
Firms need rainmakers in good times and in bad times. It is essential to grasp the economics of a firm: without rainmakers, there would be no firm.
The amount of your power, the shots you can call, depends heavily on the size of your book of business. A $5 million book of business carries much more sway than a $300,000 book of business.
If you have a multi-million dollar book of business, you can opt-out of the recession. You can continue to Zoom into the office and keep the perks because you are essential to the firm; you pay for yourself and others and generate profit.
And if you aren’t happy, it is time to move. In fact, in a recession, a multimillion-dollar book of business becomes more important, not less. You may find the power shifting toward you rather than away from you.
Rather than worrying about being laid off for not coming to work, the firm may be concerned that you’ll fire them if they force you into the office.
Or they should be, because if they aren’t making you happy, then someone else will.
What if my book of business is on the small side?
If your book of business is in the hundreds of thousands rather than the millions, that doesn’t mean you are powerless.
Your book doesn’t carry quite the same sway as the multimillion-dollar book, but something is better than nothing.
Your focus, though, should be to grow that book of business. Invest in networking and communication, reach out to people, answer questions, build relationships and strengthen your book of business.
Also, consider whether your book of business might be larger than you think. Would your book be larger if your firm had the correct practice area? What if you had more associates and support? Are there opportunities you must walk away from because your firm can’t support you?
Your book may be larger than you think, and you may have more power to opt-out of the recession at another firm.
Ultimately, the more business you bring in, the more important you are to a firm and the more opportunities to have to determine your future. So, put some effort into building your book of business today and take control of your career.
Are you a rainmaking partner who is unhappy at your firm?
If you are, remember that you have options. No matter how bad the economy is, you are valuable. If you bring in the money, you can still dial in from Ohio on a DSL line and charge New York fees. (Okay, no guarantees on this one, but you are valuable.)
You have put in the work, and you deserve to be happy. You deserve to live the life you want to live.