LI Feature Legal Industry/Business Management

5 Ways Law Firms Can Prep for a Recession

Economic dips are inevitable, but these tips can help your legal organization stay ahead.

In the wake of the Great Recession of 2008, many law firms across the United States felt the effects of the downturn. While some firms survived by strategizing their way out of it, others collapsed altogether. 

Kylie Ora Lobell

For instance, Heller Ehrman, which was founded in 1890, had 15 offices around the world and employed 730 lawyers, while Thelen — a firm that opened in 1924 — had more than 600 lawyers in the United States and Shanghai. Both firms went under suddenly in 2008.

Fortunately, in the years since that recession, law firms have figured out ways to protect themselves against tests to the economy, like the challenges they faced throughout the pandemic.

To ensure that your law firm not only stays afloat but thrives during tough economic times, you’ll need to have a solid plan in place. Here are some of the ways you can prepare for a recession in the future.


According to the experts, one of the upsides for law firms is they tend to weather recessions well compared to other industries.

“Many law firms are relatively recession-proof unless they specialize in business and corporate law, so most small and medium-sized firms don’t feel as much of an impact as other industries do,” says David Aylor, Founder and Chief Executive Officer (CEO) of David Aylor Law Offices.

But when a recession does hit, you can always refocus your specialty areas to respond to the changing times.

“Though many specialties may be less useful, other legal needs will arise through a suffering economy,” says Minesh J. Patel, Founder of The Patel Firm. “Corporate law, for example, may see less movement in mergers and acquisitions but more need in the areas of litigation and bankruptcy. Lawyers are needed, especially throughout tough economic times, to protect those most vulnerable to losses.”

“Not investing in [technology] will have a detrimental impact for law firms, not just because of a recession but also from business continuity risks.”

You can run into trouble, however, if your firm works in one or two areas of the law, and those areas take big hits in a downturn. Your law firm is likely to suffer as well. That’s where diversifying helps.

Aylor says it’s important to specialize in more than one area for this very reason. “If you do have a specialized firm that will be more susceptible to the overall loss of business, consider diversifying your training and experience now so you can make a quick pivot should a recession come along.”


By being forward-thinking and investing in the latest technology, your firm can save money and be more efficient. According to Tariq Akbar, CEO of LegalEase Solutions, law firms can look into using a model based on Software as a Service (SaaS) instead of relying on legacy technology.

“Alternative legal service providers can work with law firms on a transactional basis and hence the limited need to manage overhead,” says Akbar. “You need to be able to get lean on demand. That’s really the key to survival. Not investing in [technology] will have a detrimental impact for law firms, not just because of a recession but also from business continuity risks.” 

And if your firm hasn’t already done so, move to the cloud, which would allow you to “reduce services, storage and usage in a way that coincides with ebbs and flows in work,” says Brad Paubel, Chief Information Officer at Lexicon. “This helps avoid paying fixed costs for times when business is slower.”


When there’s a recession, people lose income and inevitably have trouble paying their bills. By providing payment plans, you could more easily retain your clients, says Sarah Ruttan Bates, Lexicon’s Director of Legal Operations and Training. “Partial payment or payment over time is better than no payment at all.”

Another way to work with clients is by offering alternative fee arrangements, since they may be reluctant to pay by the hour, says John Joy, Managing Attorney at FTI Law. You’ll just need to have solid data to accurately estimate the cost of the arrangement.

“This is not something that can be created or collected overnight, and [it] requires partners to track what their associates are working on and how much it is costing the client on a weekly basis,” says Joy. “Keeping this data in an accessible form where it can be analyzed is also critical, as client pitches can come up quickly and you need to be able to respond swiftly with a competitive pitch.”


It’s critical to estimate your overhead costs and cut back in areas where you’re spending too much money. Given the move toward remote and hybrid work options, this could include reducing expenditures on something simple, such as your physical office space. Another option would be to hire remote contractors instead of having full-time staff and attorneys on your team to decrease payroll costs.

“A smaller office space usually means a smaller monthly rental payment,” says Joseph Robert, Chief Financial Officer of Contract Counselors. “Work can be accomplished remotely, therefore more office space is not needed.”


It can be tempting to take impulsive and immediate action when the economy starts going south to protect your firm. However, this is not the right response.

Gary Mitchell, Founder and CEO of OnTrac Coach, says that in a recession, many law firms conduct massive and immediate layoffs, freeze spending, reduce salaries and cut partner compensation. “This is not in their best interest, however. Because when firms come out of these downturns or recessions, as they always do, they often find themselves scrambling to rehire talent. It’s very shortsighted.”

“This too will pass, as we have seen time and time again. Making rash decisions in the moment won’t serve you or your business in the future.”

Instead, Mitchell urged law firms to look at a recession with a long-term perspective. Ask yourself: How can you survive this without layoffs or cuts to compensation or salaries? How much money can you save in the long run by keeping your people on? And how will that improve loyalty among lawyers, staff and clients?

“This too will pass, as we have seen time and time again. Making rash decisions in the moment won’t serve you or your business in the future,” Mitchell says. “Think longer term [and] bigger picture. Don’t panic.”