(This post is not for the faint of heart.)
Last week I posted that I had SO much to say that it literally rendered me incapable of posting anything. And my friend, Jack Newton posted a 2011 Prognostication Roundup on Slaw. It was very lawyer/law firm-centric. My thoughts, however, were elsewhere. What is happening to your client in 2011? What changes are going on in his life (and yours) which will impact how we deliver services? What cultural institutions are threatened which will impact how we reach our clients to let them know we exist? There are huge changes afoot, insidious changes that have been taking place over these past three ‘transitional’ years that are going to accelerate this year and decade.
If you’ve been following this blog you know I often write about economics, both national and global, and demographics because you can’t build a business without knowing what’s happening outside your little bubble. Nor can you turn a deaf ear. Well, you could but you’ll go out of business. Plus, I have a family and business like everyone else. It matters to me. It matters to you.
So, let’s dig in.
I follow someone who posed these two questions to his readers.
What cuts in government services are you hearing about in YOUR area?
How do you and your family plan to cope with them?
He got over 1,000 responses. This is a sampling of those responses:
Jody F. from North Carolina notes that the state’s Mental Health agency went bankrupt. And worse: “One of my friends who worked there had just had surgery for breast cancer,” she says, “and the health insurance was bankrupt and could not pay her bill.”
Tim W., a resident of California, says “Fresno CA has released hundreds of prisoners in an early release program. Many of those released are rearrested within days on new charges. Makes us feel safe and warm all over to know that you can now commit crimes in Fresno and be released with a hand slap.”
Linda C. writes that, in her area, they’re closing libraries, reducing bus schedules and jury-rigging the property tax rules in ways that overstate the value of each home in order to pump up revenues.
Al is worried that, in his state, budget shortfalls are seriously interfering with infrastructure upgrades and threatening to leave citizens in the dark sometime in the next three years.
His reaction? “I’m upgrading my property with a 4.1 KWH solar array with battery back-up to provide power in the event of a shutdown in the grid.”
Marvin J., a retired police officer in Kansas, reports that Wichita has eliminated Community Police Officer positions and removed all uniformed officers from public schools.
“I’ve been receiving retirement checks for the past 18 years,” he says, “but I’m beginning to wonder how long that will continue.”
Robert L. says that “Colorado Springs has turned off many street lights and gotten rid of its police helicopters.”
Ken writes that New York City is avoiding any real cuts like the plague. Instead, “The government has increased property taxes, the water bill, mass transit, tolls on bridges and all sorts of fees, including a recent rise in the sales tax.”
George B. reports that in his area, they’ve seen city attempts to get the local fire and police — both unionized — to take 2%-3% pay cuts, but they are fighting it tooth and nail.
If you’re practicing in Illinois, they were particularly incensed:
Jack E. writes, “The [Illinois] state legislature is using a lame duck session to pass massive tax hikes to pay for their past sins.
“On the local level, we have seen firefighters and police officers laid off. Public works budgets and employees are suffering. By far the most ominous layoffs are in the ranks of teachers.”
Dean H., who also lives in what he calls “the disaster-zone otherwise known as Illinois” — reports:
“Over the weekend, the speaker of the Illinois house — and one who is considered the most powerful politician in Illinois — Mike Madigan — held ‘closed-door’ meetings with other top politicos said to be addressing the budget shortfalls (mildly put).
“The bitter irony of the outcome of these meetings is that NONE of them included belt-tightening, or any reduction in funding of state services. What has been leaked is a planned SEVENTY-FIVE percent increase (yes, that’s 75%!!) in state income taxes to help cover the shortfall. (Ultimately, they passed a 66% increase in state income taxes)
“Notice again that not a SINGLE plan that’s come out of the meetings have suggested CUTS of anything!!!”
Here are a few more startling 2010 statistics for you to think about:
#1 An all-time record of 2.87 million U.S. households received a foreclosure filing in 2010.
#2 The number of homes that were actually repossessed reached the 1 million mark for the first time ever during 2010.
#3 According to the American Bankruptcy Institute, approximately 1.53 million consumer bankruptcy petitions were filed in 2010, which was up 9 percent from 1.41 million in 2009. This was the highest number of personal bankruptcies we have seen since the U.S. Congress substantially tightened U.S. bankruptcy law several years ago.
#4 At one point during 2010, the average time needed to find a job in the United States had risen to an all-time record of 35.2 weeks.
#5 The number of Americans working part-time jobs “for economic reasons” was the highest it has been in at least five decades during 2010.
#6 The number of Americans on food stamps surpassed 43 million by the end of 2010. This was a new all-time record, and government officials fully expect the number of Americans enrolled in the program to continue to increase throughout 2011.
#7 The number of Americans on Medicaid surpassed 50 million for the first time ever in 2010.
#8 The U.S. Census Bureau originally announced that 43.6 million Americans are now living in poverty and according to them that was the highest number of Americans living in poverty that they had ever recorded in 51 years of record-keeping. But now the Census Bureau says that they miscalculated and that the real number of poor Americans is actually 47.8 million.
Today, I heard for the first time a well known food chain is going to have its first losing quarter due to customers not buying as much food in part because of skyrocketing food costs (commodity prices on such staples as wheat, sugar, cocoa and coffee have gone through the roof) and their reduced income.
There has been legitimate discussion of $5.00 gas which has less to do with price manipulation and more to do with China growing and demanding the resource in greater quantity.
On a personal note, I know many people who have lost their jobs, have had to take on second jobs and lost their homes. I’m sure we all have seen it or felt it firsthand. This is the client of your future.
There are two take aways from these comments and statistics:
- Self-employment and start up businesses are going to skyrocket. (note: the referenced blog post was written 3 1/2 years ago when times were good, real estate prices were high, etc.) So, knowing this I expect the self-employment startup market to double!! And once you work for yourself, if you succeed you seldom go back to employment. This is a HUGE societal shift
- Your ‘average Joe’ law client is going to have fewer dollars to spend on needed legal services and the need for unbundled legal services is going to explode. because not everyone will want to be a D-I-Y litigant.
Some of you may say you knew that. The reason I used this excerpt, however, is each and everyone of these people sounding off on this blog and all of the sobering statistics showcase your potential client ‘today’. It’s not coming from some talking head with a cushy job reading off a teleprompter then flying off to Belize for vacation away from the unwashed masses as they tell you the economy is improving.
This potential client is literally frantic about how the things they have little to no control over in the economy are going to impact their everyday living. Some will end up under your local highway underpass. But most will find a way to put food on their tables. Most will hold onto their hard-earned dollars, too. They will be skeptical, scared and nervous as everything they thought they could rely upon, everything they ever knew to be right is challenged. They will only spend on that which is truly important and no longer spend on anything which is inconvenient and doesn’t save them time and money.
I’ll be writing more on major societal and cultural changes in coming weeks. The questions I leave you with are ‘how are you making changes in your practice to address clients’ economic stresses? Are you changing the method of delivery of your services? Are you transitioning to unbundled services? Are you changing how you market to these clients? Or is it business as usual?