Law firms position themselves to weather economic downturn
| Friday, Apr 03 2009 06:17 PM
Last Updated Friday, Apr 03 2009 06:17 PM
Enough with the lawyer jokes. In this economy, once-comfortable law firms are learning they have to react quickly to changes around them or risk suffering like so many other businesses.
The good news is, Bakersfield's situation appears much less dire than what some of the country's biggest firms are experiencing: mass layoffs, furloughs, pay cuts, even closure.
Still, having relatively small, stable staffs serving a diverse clientele in the Central Valley goes only so far.
The heads of four prominent firms in town reported taking recent defensive measures such as reviewing -- and in some cases freezing -- their legal fees to make sure they're competitive. They're also diversifying their services and shifting resources according to changes in the economy.
By all accounts, though, Bakersfield's legal community by and large has avoided layoffs and pay cuts amid the recession.
"The legal profession is doing well here in town, but ... doing well doesn't happen in a vacuum," said Jay Rosenlieb, managing partner of Bakersfield-based law firm Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball LLP.
"It's those who are willing to confront the challenges and recognize the challenges and, quite frankly, be ahead of the challenges -- those are the (firms) that are going to succeed."
The threat of failure looms large these days. According to reports by the American Bar Association, at least 3,500 U.S. lawyers were laid off in March, up from roughly 2,000 in February and 1,500 in January.
Other measures being taken, according to a report last month by the Bloomberg news service, are cuts in pay, including among partners, as well as sabbaticals, buyouts, curtailed training programs for law students and delayed start dates for new hires.
The outlook isn't good, either. Among some 14,000 lawyers surveyed by the national association, about a fifth expect to lose their jobs this year, and close to a third expect to earn less this year than last.
"It's probably the worst I've seen it in 30 years of practice," said Los Angeles lawyer Holly Fujie, president of the California State Bar.
She attributed much of the downturn to problems within the financial industry and large corporations, as well as a willingness among troubled business owners to forgive some debts and contract violations rather than pay an attorney to represent them in court.
These trends have not necessarily carried over into Bakersfield's business community, lawyers here say. If anything, they contend, relative stability in the local economy, thanks in part to the oil industry, has allowed them to maintain a consistent level of activity.
"The diversity of our clientele has always been a mainstay for us, and we are as busy as we have ever been," said Steve Clifford, president of the Bakersfield-based law firm of Clifford & Brown PC.
Even so, local firms did credit their relative good fortune to recent increases in bankruptcy and employment law cases, as well as litigation and counseling -- all things you might expect to see in a down economy.
Also not surprising is that local firms report fewer clients requesting real estate-related legal services.
The trick is anticipating such shifts and mobilizing staff to handle the influx when change arrives.
The Bakersfield office of Borton Petrini LLP, for example, foresaw greater demand for loan modification work, so its staff boned up on the issues, manager Cal Stead said.
"We're always trying to adjust our business to try to deal with these cycles," he said.
