It is all too easy to think that the solution to falling fee income in a downturn is simply to find new clients.
Well, up to a point, but this is, or may well be, a riskier strategy than you might imagine. Time may be better spent looking at ways to develop your active clients; or re-activating your dormant clients.
So, why not new clients?
For most organisations changing law firms in a downturn is going to be well down their list of priorities; and for most law firms, themselves facing the same recessionary pressures as you are, hanging on to their valued clients is going to be important. The result is that changing advisers is only likely if there is a compelling reason to do so. Certainly there will be price sensitivity and pricing pressures, but the aware law firm should be prepared to be flexible. And among the reasons for change are a couple that should give you pause for thought.
First, the incumbent law firm may be trying to “lose” the client. The client may be a bad payer, or it may be asking the law firm to do something that leaves it uncomfortable. In which case why would you want to act for the client? Client take up procedures all too often get overlooked in the bad times, but ignore risk management at your peril.
Alternatively, the incumbent law firm may have cocked up, which in turn may mean that the client has a somewhat jaundiced view of lawyers: and you may get sucked into a lot of remedial work that the client is reluctant to pay you for.
As Stefan Stern noted in his FT column Beware of fad-loving analysts
Simple solutions to complicated problems can be seductive.
And all too often such solutions fail to deliver. There are certainly going to be opportunities to find and develop new clients in this downturn; and there are going to opportunities to be burnt: as a result of taking on unsuitable clients, agreeing to do work beyond your competence, or on terms that not only devalue the work and demoralise your team, but set a precedent it may be hard to reverse later.