(This is a bit lengthy so read when you have a few moments).
I recently watched Bernanke on 60 minutes and after all the gloss and political correctness he said two things which struck me. First he made it very clear we are in for a rough ride the next four to five years and that was quite an admission. (I personally believe we are going to be in for a rough ride the whole decade and for a whole host of reasons). And then he said the magic words:
We’ll be fine eventually as we are an entrepreneurial culture.
Yes, Ben, we are.
And on that same day, renowned economic expert, Harry Dent Jr. wrote:
In business, creative entrepreneurs will be the big winners as they were in the down economies of the 1930s and 1970s.
I’m not a fan of Bernanke (he was apparently an economic advisor contributing to Japan’s bad decisions which have led to their decades long economic woes. As a Member of the Board of Governors of the Federal Reserve System on February 20, 2004, Bernanke gave a speech: The Great Moderation, where he postulated that we are in a new era, where economic volatility has been permanently eliminated! Really, Ben?) However, Bernanke has given us a clue as to our future. He is basically saying it’s every person for themselves.
And the recent numbers support this:
Americans who have been out of work for more than a year are much less likely to land a job within the next month than those who have been out for fewer than five weeks; the two groups have re-employment rates of 8.7% and 30.7%, respectively, according to The New York Times.
So, is it time for you to get entrepreneurial? Is now the best time to go solo?
Like many other industries, the legal profession is being forced to make changes in a 21st century economy. Since 2008, law firms have shed 10s of thousands of legal jobs (another 1500 these past two months) and these jobs aren’t likely to ever return. Some are saying we’ve hit the worst and are on the upswing. Well, they’ve been saying that for two years. These are the same soothsayers who missed calling the recession to begin with. Don’t believe it. We are entering uncharted waters in this New (Global) Economy. This economy is one which will have the legal architects of the future rebuilding the profession and revamping how legal services are delivered.
Whether you’re a contract lawyer, a new grad or a laid-off associate you’ve got to take charge of your legal career. And even if you are currently employed you should have a “Plan B” at the ready. Granted, hanging your own shingle can be a risky option for some but it is one that many will simply have to take.
So I Ask Again, ‘Is Now the Perfect Time to Go Solo?’
The short answer: Yes. Now, I’m totally aware of the inner hysteria most people are feeling about our economy even though the holidays have many of us breaking free from our budgets just a little. I am constantly reviewing all my decisions, making plans A – Z and going crazy mapping out the ‘what if’ scenarios. Not necessarily the healthiest of practices but being aware of the world around you and taking action IS a healthy practice.
Maybe you’ve been laid off, can’t find a job, just got down on your knees ever thankful you can get continued unemployment benefits. Or maybe you still haven’t gotten your very FIRST job. I get it. Trust me, I do.
History tells us, as quoted above, when economic times are the shakiest, it is the perfect climate to start a new business. There is even a new movement afoot claiming death to the resume!
The following is information collected from disparate sources and some of my favorite inspirational examples:
Did you know that 16 of the 30 companies which make up the Dow Jones Industrial Average were started during a recession or depression? These little companies include Disney, McDonalds, Proctor and Gamble, Alcoa, General Electric and Johnson & Johnson.
Fast forward to 1973-75 when the U.S. was captained by an unpopular president, embroiled in the infamous Watergate scandal AND at the hind end of the Vietnam War, a highly controversial and expensive war which polarized the country. Within two years gasoline prices had increased by more than 50 percent. Credit was very tight. And, you guessed it, consumer confidence was at historic lows. (Does this sound painfully familiar?)
And in these terrible times a few entrepreneurs you may know figured ‘what the heck.’ Those tumultuous early 1970’s saw the beginnings of Famous Amos Cookies, Supercuts, Chili’s, Cablevision, Oakley and the start of a fairly well-know company (their products you might be using as you read this) called, that’s right, Microsoft. (wonder where Bill Gates is expanding to right now?)
Other notable businesses launched during recessionary times: Costco, Applebees, J. Crew, Whole Foods and Intuit.
You’re asking yourself, ‘how is this possible?’ Don’t most businesses fail? With times so tough starting a new business seems the definition of insanity. Not really. It is during these times that entrepreneurs (and very smart business people) realize they have nothing to lose and everything to gain. The world is crashing down around them anyway. The very things which might have prevented those from starting a business before are no longer present – the opportunity cost is low.
Yes, it’s a little concept called ‘opportunity costs.’ When times are good and you already have a safe job and many law firms are hiring, turning down a paying job with a paycheck means giving up the ‘opportunity’ of a good job and there is a quantifiable cost associated with turning down that job such as salary, health insurance, paid vacation and sick time, matching 401k. You are giving up this known and quantifiable opportunity offered by another for the unknown adventure called solo practice, something for which you are totally responsible.
Now, a few select lawyers will always have these ‘job’ opportunities and if the jobs offered align with their professional goals they should grab it. However, what if there are no good jobs being offered to you? What if you are just finishing law school, passed the bar and no one is hiring? You can stay home and watch reruns of ‘The Practice’ and ‘Damages’ or you can open your own solo practice. There is little opportunity cost to do the latter as the alternative is sulking, fretting and eating lots of junk food or competing for a minimum wage position only to be told you are over educated for the cashier’s position.
When bad times hit, the world as we know it changes. Economies experience severe upheaval and disruption. The earth moves as it deconstructs and rapid change becomes the norm. For most, paralysis sets in. But those who shake off the paralysis, those who see opportunities where others only see misery, are the entrepreneurs. They search the rubble of ‘what was’ and look for opportunities to create ‘what will be.’
What’s happening in our legal world (and the rest of the world, too):
- Competitors weaken.We are all reading about Big Law layoffs, partners jumping ship, small firms who became complacent and forgot the business components of running a law firm…well, they are freaking out. Many of those lawyers you viewed as competition with tremendous overhead, fancy offices, excess staff are facing challenging times. Maybe they are deciding its time to close up shop or downsize and outsource work.
- Clients are seeking alternative and cheaper ways of getting legal work done. When the status quo is acceptable, clients are more likely than not going to stay with their current lawyers even if there are more innovative and creative and better lawyers out there. Complacency and disinterest in shopping around go hand in hand with good times. When money tightens, clients start shopping around.Whether for cheaper legal services or more value for the dollars they spend, they still are shopping. This lends validity to the statement, “in difficult times market, market, market.” There is a palpable shift in the flow of business and those with a great message pushed into the public arena WILL get new business. It is not a time to tighten your belt on marketing. Clients still have needs. You better be promoting your solutions.
- Big Law cuts back.They make the huge mistake of reducing their marketing budget and even services especially to their smaller or less valuable clients. These smaller clients may be a perfect fit for you.
- Client Disloyalty Can Benefit You. As your competition reduces services and clients look for more creative and cost-effective ways to save their scarce resources and get their legal service needs met, it means they are less likely to remain loyal to even their long term legal service providers if there is a better alternative which improves their own bottom line. You need to recognize this and be their innovative, cost-effective solution.
That means opportunities for you when you open your solo practice. Specifically, what you can do:
- Be the other white meat.Target those clients who are using more expensive, traditional legal service providers and show them there is an alternative to what they currently know. Show them in lean times fixed fees and value pricing are superior to billable hours. Explore and implement ‘subscription’ or monthly retainers. Go unbundled. There is no box lawyers have to occupy. There is simply foundational rules we cannot break. The sky is the limit and now is the best time EVER to explore the sky and be creative. It’s a new frontier and you need to stake your territory.
- Market aggressively. As the ties that bind clients to their lawyers unravel, your competitors’ clients are more willing to try a new legal services provider. However, they won’t find you unless they are receiving your message loud and clear. And if you are not shouting it out, I guarantee you some other lawyer(s) will be.
- Innovate.Be the low cost and/or a high value solution to your competition’s clients and they will be receptive to listening to your message.
- Present yourself as an ‘outsource’ to Big Law. Big Law is laying off left and right and going overseas. You can be the less expensive alternative to the associate who is being axed because you can be used ‘as needed’ without the carrying costs of a traditional employee. You can be an alternative to going overseas IF you can play the ‘Buy in America’ card well. There is a psychological pricing point where firms will want to keep the work on these shores if they can buy into your selling proposition. Find it and build your business. The sooner you start leading the pack, the harder it will be for others to catch up.
Very few clients will make a change unless they are forced to. But the opportunities are clearly there in this economy as client demands are up and satisfaction is down. The economic times we are in will rock many a client’s world. Be entrepreneurial, innovative, aggressively seek out business while still maintaining your ethics. When the dust settles, those who realized this was a time of great opportunity will be profitable. Now is not the time to fade away and lick your wounds. Now is the time to innovate, create and build.