How to Prepare Your Law Department for the Next Recession

As Bob Dylan once sang, “You don’t have to be a weatherman to know which way the wind’s blowing.” Similarly, you don’t have to be an economist to foresee the slowing economy predicted in 2023.

In the GC Advantage^SM webinar, “Preparing Yourself and Your Law Department for the Next Recession,” BarkerGilmore Strategic Advisor and Coach Michelle Banks joined me for a conversation to put legal professionals in a better position to handle an economic downturn, both for your own preparation as well as for your legal department. This article is a summary of our discussion.

Prepare Yourself for Recession

In a time of change, preparation can be a critical differentiator. Having a contingency plan in place can help an individual react quickly if the need arises. Flexibility and the ability to adapt are necessary attributes for success, alongside vision, communication, and engagement, particularly for those in a leadership role.

In other words, it’s necessary to consider what you want the future to look like and identify the gaps between where you are now and where you want to be. Then, communicate these findings to supervisors, recruiters, direct reports, and others. Giving both yourself and others many vehicles of communication during uncertain times is essential. Other ways to prepare may include:

Mitigating Personal Risk

Be brutally honest in answering the following questions: “Am I at risk? Am I an asset to the company?” Some practical ways to address these questions include:

• Understand Reduction in Force (RIF) criteria.
  • Understand whether RIFs are based on heads, dollars, seniority, job performance, or a combination of factors.
  • Analyze whether layoffs comply with applicable federal, state, and local laws.
  • Understand the financial implications of a layoff, such as how deferred compensation pays out.
• Practice your elevator speech. An elevator speech is a pitch for yourself. Get comfortable practicing it and trying it out on others to see what people respond positively to when describing what you do. When the 2023 Association of Corporate Counsel (ACC) Chief Legal Officer (CLO) Survey asked which areas CLOs are looking to hire in this year, they answered: (1) mergers and acquisitions, (2) cybersecurity, (3) data privacy, and (4) legal operations. Highlight those experiences. Additionally, focus on the following skills and knowledge CLOs are interested in: (1) communication, (2) listening, (3) executive presence, and (4) financial acumen. Be visible, advocate for yourself, and ensure your manager can successfully advocate for you. Be an asset to the company by performing useful tasks and acquiring or improving skills. Keep track of your contributions.

Building Your Brand

In times of uncertainty, it is prudent to be ready for anything, including a potential job search. Building a professional brand can prepare you for this possibility, and continuing to cultivate it can set you up for quick success.

Steps like taking a professional headshot and creating a professional bio can make you and your goals easily recognizable to others in the field. To feel ready for interviews and networking opportunities, practice talking about yourself and get comfortable explaining who you are and what you do.

Finally, take advantage of LinkedIn by optimizing your profile to promote yourself. A LinkedIn profile does not need to be the exact same as a resume, but it can be used to showcase your skills and experiences. Plus, there are plenty of educational and free tools that can be accessed on the platform. When used well, it can be an excellent place to build a professional reputation and relationships.

Building Your Network

Connecting with many different people can broaden your available opportunities. There are many ways to make new connections. A first step may be getting to know people inside and outside your organization. Introduce yourself to people who are involved in bar associations or other professional groups. Be bold in seeking out mentors. Many people want to help others, especially during times of economic uncertainty.

You may also want to reconnect with professionals you have worked with or met in the past. Reactivate relationships with potential references and reconnect with alumni from your alma mater.

Keep in mind that networking does not have to be done exclusively in person. There is plenty of networking that can be done online.

Thinking About the Future

Keep an up-to-date resume in relevant databases like BarkerGilmore’s. You may also want to consider taking online courses to learn more about in-demand experiences, such as cybersecurity, to improve the efficiency of contract management or department operations.

As a practical matter, save enough money for a rainy day to mitigate stress. If you do experience a layoff, you may want to work part-time or hourly, perhaps as an Alternative Legal Service Provider (ALSP), after ensuring the severance requirements of your company do not prohibit it.

If you are a leader of a law department, it is also important to consider mitigating recession risks for your department and team.

Prepare Your Law Department for a Recession

Michelle cites the Harvard Business Review: “Recessions are a high-pressure exercise in change management and, to navigate one successfully, a company needs to be flexible and ready to adjust.” Prepare for the worst but hope for the best.

Win Arguments with Data

Usually, recession planning starts with cutting costs. Get a seat at the recession planning table and communicate the importance of the legal department’s role in the context of the company’s business goals. One way to do this is by having knowledge of important numbers, including:

• Internal and external legal spend. Compare it to your revenue size peers and your industry competitors as a percentage of the company’s revenue.
• Compensation. Compare compensation of peer companies using ACC, BarkerGilmore, trade associations, and your own Human Resources department to provide relevant data.
• Revenue per lawyer ratio. There are industry benchmarks to assess whether the legal department has more or fewer lawyers than the industry average.
• Quantify contracts work. Ideally, this is done using contract lifecycle management software. However, if you must, use a rudimentary contract management system to track the number of contracts opened, pending, and closed every month to generate a report for the CEO and CFO.

Rationalize Legal’s Workload

Efficiency is key when preparing your department for an economic downturn. Therefore, you must be prepared to both talk about where the legal department’s work is being done as well as make strategic changes as needed. Related considerations may include:

• Don’t use thoroughbreds to plow a field. Decide the level of materiality which warrants legal review. Remind the business team they can review low-risk agreements.
• Optimize department organization. Evaluate how team members’ skills and experiences are best utilized to create an optimized organizational structure. If you can, bring more work in-house to achieve cost savings.
• Optimize department performance. There are some obvious change considerations, such as streamlining processes, automation, upgrading systems, training the business, using data to help build the business case, open-mindedness about artificial intelligence (AI), utilizing ALSPs or other methods for flexible help, and creating a high performing legal operations team that is well functioning. According to the ACC CLO survey, the number one strategic initiative 70% of CLOs expect to focus on this year is Legal Operations (LegalOps).
• The business must be willing to accept greater risks. If the company eliminates a legal job, that work will either not get done, be delayed, or get done by outside counsel in a more expensive and potentially more conservative way. Make sure the business understands that service levels may change.
• Retain top talent. Best-in-class law departments continue to invest in the future, including talent retention. Research shows that people typically quit leaders not jobs. Focus on your strongest performers because they are likely to be agile, adaptable, and flexible, and help get the organization through change.

Cut Costs in Innovative Ways

It may become necessary to cut costs at some point during this process. If this is the case, think about whether the legal department has the right resources and if these resources are being used in the best way. It’s important to start planning ahead without jumping the gun. Some key considerations when looking at cost-cutting measures may include:

• Fixed cost vs. variable cost. Look at whether you can take a fixed cost and make it a variable cost. For example, I was able to eliminate the fixed cost of a full-time role dedicated to EEOC matters and move to the variable cost of an outside firm on a per claim basis.
• Lean on your vendors. Work with Procurement to push vendors, not just outside counsel, for discounts. Consolidation can work if it makes sense for the company to enjoy volume discounts. Examine whether your outside counsel guidelines reflect the economic realities of today with an eye toward trimming costs.
• Be business oriented. Look at cost-savings for the entire operation, not simply the legal department. When you communicate that purpose to the business, they understand Legal is not merely a department of lawyers, but a team with the purpose of the business behind it.

BarkerGilmore Can Help You Prepare for a Recession

Economic downturns, headwinds, and uncertainties present challenges, both professionally and personally, to in-house counsel. BarkerGilmore’s team of professionals are happy to help accelerate the initiatives that you’re already pursuing or to supplement your current strategic thinking to help you realize your vision.

As always, reach out anytime if you or your organization may benefit from BarkerGilmore’s recruiting, leadership development, or legal and compliance department consulting services.

Mike Williams and our team of professionals are happy to help accelerate the initiatives that you’re already pursuing or to supplement your current strategic thinking to help you realize your vision. Please reach out if you or your organization may benefit from our recruiting, leadership development and coaching, or legal and compliance department consulting services. Let BarkerGilmore help you build and optimize your legal and compliance departments.