Most of us have never experienced anything close to the economic downturn we are currently in. We have had the good fortune of living and working through one of the longest periods of generally good times. But for lawyers, law firms and clients alike, the current economic troubles are forcing us to confront new and often difficult issues. This month Law Practice focuses on some of the money-related questions that firms are grappling with today.
Although the foremost concerns understandably are about a shortage of money, for many the economic crisis has laid bare underlying flaws in the way their firms are led and managed. While these flaws were more easily overlooked in good times, ignoring them is no longer an option. This is especially true for firms that are grappling with how to best staff their firms and structure compensation. People are both a firm’s greatest asset and its greatest expense—firing anyone is perhaps the hardest decision a firm will ever face. David Gaulin writes about what to consider before making layoffs, and how the challenge of “right-sizing” your firm provides the opportunity to restructure your business model in overdue ways. Retrenching firm finances also requires that the members of the partnership step up to the plate to justify their compensation, and Karen MacKay helps walk partners through key questions to ask themselves.
While clients increasingly want fixed fees and other alternative fee arrangements, many lawyers are still in denial, holding out for the almighty billable hour. In their articles Beverly Hedrick and Bob Denney give perspectives on why both points of view make sense, and how you can make the transition to various fixed-fee arrangements. Andrew Hall explains how focusing your invoices on outcomes that matter to clients, rather than outputs (that would be the aforementioned billable hour), will strengthen profitability.
Finally, our cover story asks you to think about the unthinkable: having one of your most trusted lawyers or employees steal from your firm. David Debenham and Sheila Blackford show you how to safeguard against those who may have the motive, means and opportunity to commit fraud or embezzlement.
Money does change everything, but in this issue, we hope to give you greater insight into how to face your financial issues and make the best of hard times.