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Smaller firms should be ‘hustling’ and ‘staying proactive’ amid economic uncertainty

While sole practitioners are confident they will fare well if a recession hits Australian shores, there are a number of things smaller firms can do to safeguard themselves from an economic downturn.

user iconLauren Croft 13 July 2023 SME Law
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Following the recent release of the 2022 Annual Profile of Solicitors NSW report, which recorded a growth of sole practices, as well as over 40,000 practising lawyers, president of the Law Society of NSW Cassandra Banks told Lawyers Weekly that smaller firms were likely to be experiencing “high anxiety” in the current economic turbulence.

“I think everybody is already feeling it. I don’t think legal work is necessarily going to dry out. But whether people can pay their fees is another thing. The ongoing funding of legal aid is something that each Law Society president advocates for an increase in funding is also critical. I think every business is going to be doing it tough soon,” she said.

“People need to be really careful about how they operate their business, and fingers crossed, we don’t enter into recession, but not looking good. It’s going to be a wait and see. But obviously, the Law Society will provide as much support as we can to sole practitioners and small businesses, and I mean, everyone within the profession, but we know that it’s going to be really hard felt for those smaller firms and sole practitioners.”


Following this, Lawyers Weekly spoke to four sole practitioners to get their take on whether the number of micro firms and boutique practices will start to stall or decrease in the current market – and while the general consensus was that sole practitioners would be able to navigate economic turbulence with flexibility and efficiency, there are a number of things sole practitioners and boutiques can do to safeguard their businesses from a potential recession.

According to Macfarlane Law principal Emma Macfarlane, there are a few steps smaller firms can take to prepare themselves for a recession.

“Whilst the legal industry is typically more recession-proof than other industries, some practitioners and boutique firms are likely to weather a recession storm better than others, depending on their service offering, amongst other factors,” she said.

“Consider whether there is a need to diversify your firm’s practice area offerings. Certain practice areas are countercyclical, remaining in high demand despite periods of economic downturn. In my observation, these include civil litigation, family law and insolvency. If your practice does not already offer one or more of these practice areas, consider whether you need to diversify and how you can introduce them.”

ClearSky Legal principal lawyer Michael Hung also had three key tips for firm owners to protect themselves.

“First, develop an expertise and carve out a niche – one practical way of doing this is to undertake the Law Society’s specialist accreditation program. Having sat on the business law specialist accreditation advisory committee since 2020, I have seen many candidates benefit immensely from the program, both growing in their professional knowledge and gaining industry recognition for their expertise,” he outlined.

“Secondly, continue with doing great work – for sole practitioners, word-of-mouth referral is really important; completing each matter with the highest possible quality and going above and beyond with your client service are the best ways of winning the next piece of work.

“Thirdly, think about where else you can apply your legal knowledge – I have taught as a teaching fellow at UNSW Law & Justice since 2014, and that’s a great way of staying up to date with your legal knowledge, and since February this year, I have sat as a general member in the NSW Civil and Administrative Tribunal, which adds a really interesting perspective to the judicial decision-making process.”

Tarr Law principal Hayley Tarr echoed a similar sentiment – and said that the best defence against economic turbulence is doing quality work and drawing in loyal clients.

“I think the best safeguard is the high quality of the work you do and the care and attention you give to your clients. Even in a recession, people are going to get divorced, sell a house, pass away, and encounter any number of life circumstances that require them to engage a lawyer. So, there will be work for lawyers. The key is to be the lawyer that someone chooses to engage when they need one,” she explained.

“Sole practitioners are just as good as lawyers at large firms and so have just as much chance as any lawyer at any firm anywhere to be the ones chosen for this work. Focus on that. Focus on being the best lawyer you can be, and the work will flow from that, even in a recession. Just keep planting seeds. Every action you take to better your business leads to something, even something unexpected. In the down days, stay motivated. Keep hustling.”

Greenleaf Legal principal solicitor Amanda Elias takes regular steps to safeguard her firm, such as diversifying her practice areas and client base, maintaining strong financial management, building strong client relationships and placing greater focus on efficiency and productivity.

“By diversifying my practice areas and client base, I can reduce my firm’s reliance on a specific sector or type of client. This can help cushion the impact of a recession by maintaining a more stable and varied revenue stream. Implementing sound financial practices such as budgeting, monitoring cash flow, and reducing unnecessary expenses. Keeping a close eye on my firm’s financial health by regularly reviewing and analysing financial statements. Having regular chats with my accountant and bookkeeper.

“Focusing on building and nurturing strong relationships with existing clients. Providing excellent service, being responsive to their needs, and demonstrating value in my legal representation. Satisfied clients are more likely to stay loyal during tough economic times and refer new clients to my firm. Streamlining my firm’s operations to maximise efficiency and productivity. Leveraging technology and automation tools to optimise workflows, reduce manual tasks, and increase my capacity to handle a higher workload with fewer resources. This can help me deliver services more effectively and cost-efficiently, making my firm more resilient during a recession,” she explained.

“Actively engaging in networking and referral activities to expand my professional connections. Joining legal associations, community networking groups and attending industry events. Cultivating relationships with other lawyers and professionals. A robust network can provide a good source of referrals, helping to sustain my firm during challenging economic periods.”

Increased networking can also mean a greater number of referrals – and therefore, a bigger client base to fall back on, added Ms Macfarlane.

“Capitalise on and grow your referral network. It’s time to call in (and build upon) all those years of networking! It’s a relatively inexpensive way to grow your business. Double down on publishing social media content. Reduce your footprint. If you’re paying for a serviced office that you don’t really use, consider ditching it, at least temporarily,” she said.

“Further, consider implementing payment plans and non-traditional pricing structures. During times of economic uncertainty, clients will appreciate being given time to pay and the certainty that fixed fees and value-aligned pricing models offer.”

Finally, safeguarding a firm in times of economic uncertainty requires “proactive measures to ensure stability and mitigate potential risks”, Ms Elias concluded.

“Each recession and economic climate is unique, so as a sole practitioner, it’s crucial to continuously assess the situation, adapt your strategies, and remain resilient,” she said.

“Staying proactive, embracing innovation, and maintaining a client-centric focus to position the firm for long-term success, regardless of the economic conditions, is the way to go, regardless of a recession or other.”

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