Legal Village

Now is not the time to panic

Posted 11/09/2007 by Jonathan Goldstein

Four months after leaving the law, it is interesting to sit and watch the response of the industry to the latest financial crisis.

There is no doubt that those who took their holidays in August returned in September to an entirely different market where the availability of credit will slow down corporate work flows.  Time will tell whether it was a good time for me to join the property world. Having said that, it comes as no surprise that on the first hint of a slow-down - having had years of a strong bull market - you begin to hear whispers that firms are considering laying off people.

The current income obsession is a trait from which the profession refuses to escape. Now is the time that firm leaders 'earn their corn'. It is a time for hard decisions and laying off people is not necessarily the right one. Firms with proven strategies must make sure that they plan for the medium term rather than react to short-term blips.

If that means that this year's APP is a little less than last years, that is not a disaster - provided that the fundamentals of the firm remain strong and the partners understand what the firm is trying to build. It can be far more damaging to take short-term action and then realise when the market has picked up again that there are not enough individuals in the firm to service a client-base in which you have been investing for many years - or, worse, that you have damaged your brand by over-reacting.

The investment banking world is littered with examples of mass redundancies followed by vast under-staffing when the market picks up and then a recruitment frenzy. The legal industry is not too far behind on that score.

Firms must learn from the lessons of the past. In the words of the philosopher George Santayana, "those who fail to learn the lessons of history are doomed to repeat them".