Bracing for Troubled Waters

Few doubt that the U.S. economy is either dangerously close to a recession or already in one. There is equally little doubt that other global economies are weakening as liquidity further tightens and new bank write-downs emerge. There is a common perception that law firms also suffer when the economy goes bad. While it is true that transactions-oriented practice groups fare worse during times of economic slowdown, law firms generally fare well, irrespective of economic conditions, when compared with other business sectors. Both managing partner and CFO will instinctively return to the basics of law firm economics. To a degree, reviewing the basic drivers of profitability is a helpful exercise ' but this provides part of the answer. Irrespective of whether your firm is on the winning or losing side of a looming recession, undoubtedly the firm's finance department will be involved heavily in anticipating solutions to 'shore up for troubled times ahead.'