LawFuel.co.nz – It can be a lonely time running a small law practice, but there are some steps their principals can take to help weather the storm
Although many may believe law firms survive and prosper in good times as well as bad, the reality is that many face a tough time in the ongoing economic turmoil and some will not survive.
Already the now infamous property downturn has taken its toll on both small firms and large, with the smaller High Street conveyancing practice bearing the brunt of the slowdown. Recruiters are seeing legal executives and solicitors who worked in property seeking jobs after being released from their small firm employers.
Unlike the large law practices who can rely on the uptick in infrastructure, construction, climate change, regulatory and other work, the small firms rely on their foundation of residential and small commercial property transactions.
Certainly the large firms have suffered from the drying up of major financing, banking and equity transactions, but they have enough fat and management nous to work their way through the deepening recession. Not so for most smaller firms, although some are particularly well managed and have the ability to scale back their overheads. Many, however, do not.
The drying up of the second-tier financing and sharp reduction in bank lending has crushed the ability of small firms to develop their transaction-based fee income while fixed costs means they’re operating at either significantly lower profitability or at a loss.
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