Law firms have historically been relatively recession proof. The law never sleeps after all. However, there are still a few ways your firm can best prepare itself for potential financial difficulties in the coming months.
Expand the law practises you offer.
Certain businesses can really feel the sting of financial hardship. If their usual cycle is disrupted for any reason, it will directly impact their cash flow for the whole year. It’s therefore wise for your firm to offer services that will always be in high demand. To think about not being reliant on as many outside factors.
Think about it, if there’s a crash in the housing market, there’s less need for a full conveyancing department. However, family and criminal law are likely to be unaffected. There will always be crimes (unfortunately). Families will always need legal advice.
While it wouldn’t fully protect your firm from a financial hit, introducing these areas may well be the thing to help you get through the worst of the storm.
This might be in certain teams and practises. It might be in office space. If the pandemic has shown us one thing, it’s that many businesses could better utilise flexible and remote working. There could be a real opportunity to downsize commercial office space if a fraction of your usual staff are working there on a regular basis.
For some firms, downsizing will potentially involve moving a solicitor from one area to a more active one. Unfortunately for some firms, it will mean cutting teams down all together.
Keep an eye on your capital.
Businesses across the board should always be mindful of their capital. Law firms are notoriously bad at cashflow for a number of reasons. However, 2020’s more than proven to us that you never fully know what’s around the corner, so having some cash in the bank is sensible.
For law firms, this could be the difference between being able to accept opportunities and not. If you have capital to invest, this could open doors to potential mergers or exceptional hires down the line. This could be the thing that makes all the difference to the future of your firm.
The law has always been a constant. It might take a hit but it will always bounce back. The firms with the diverse areas of practise are likely to be the ones that come back the fastest, with the more traditional firms potentially struggling to diversify in time.
Numero Accounts is here to help you manage your numbers, whatever your firm’s offering. Our extensive experience in the legal sector means we’re the prime candidates to help you position yourself as well as possible. Get in touch to see how we can help your firm.