How To Survive An Economic Downturn
With talk of a recession now inevitable, many attorneys have begun to worry about their job security. It’s worth noting that actual recruitment dates still look healthy by historical comparison. Nationally, Q3 2022 sideways trades were more than 20% below Q3 2021 levels, but remember the market has been incredibly active in 2021. If we use Q3 2019 as a more normal baseline scenario, we find an almost 10% increase in sideways movements in Q3 2022. But even if widespread pain is not yet apparent, there is much anecdotal discussion about so-called secret layoffs. Additionally, at least one firm has pushed back the start dates for their new hires in their first year, reviving an approach that was widespread during the Great Recession.
Based on the conservative assumption that conditions will worsen before they improve, now is the time to assess your situation and take steps to position yourself to weather a downturn. Here are a few things to consider.
- Are you a restructuring lawyer? can you become one
There’s nothing like a counter-cyclical practice to help you weather a recession. If you happen to be a restructuring attorney, you should be more concerned about a coming workload than about job security. But assuming you haven’t worked in the bankruptcy business, now might be the time to jump in. Historically, corporate counsel tended to have broader skills, with bankruptcies being part of a more diversified transaction practice. Even if modern law firms tend to focus on specialization, this historical legacy can still serve as an inspiration. If you’re already in a corporate or financial practice, call a restructuring partner and ask if the group needs help. With the next wave of restructuring likely on the horizon, you could be in the enviable position of having plenty of work to do if you can pull through now.
More broadly, you might want to consider a retooling, if not a reorganization, then a different, more recession-resistant practice. This is especially worth considering if you are a junior corporate employee who has never particularly liked your job. The best time to retool is when your group isn’t busy – a slowdown in business could present an opportunity to escape.
- Assess your business: Is it well positioned for a downturn?
When thinking about the relative strength of your company, it helps to consider the past, present, and future. As the disclaimer states, past performance is no guarantee of future results. But if your company is known to have secretly (or outright) laid off during the last recession, it’s probably a relevant consideration.
The present is relatively easy to assess. Are you busy? Is your group busy? What about your friends in other groups?
The future is inevitably bleaker, but you can still make some educated guesses. Is your company dependent on M&A and capital market work in an unusual way? Bad sign. Is it well diversified, with strong litigation and restructuring offerings? Good sign.
- Consider your alternatives
Paying close attention to conditions in your current business is an important first step, but you also need to compare yourself to the rest of the industry. It’s a good idea to talk to friends at other companies. But for deeper insights based on data, a relationship with a trusted recruiter can be invaluable. We spend the whole day talking to people in different companies so that we are always informed about the development of the market. And we have access to extensive proprietary data specific to individual markets and practices. We know which companies are growing and which employees are losing to the competition. Rest assured that experienced recruiters will be among the first to know the real story when it comes to stealth layoffs.
If you learn that your company is underperforming relative to its peers, or that it is perceived as a greater risk in a downturn scenario, you would do well to investigate whether companies in a stronger position might be looking for someone of your skill set. Of course, a trusted recruiter can also help with this due diligence.
- Watch the partners
Even in a good economy, most partners are open to offers from competing companies. But when conditions worsen, it’s extra safe to assume your partner is taking calls. Many partners feel the ground shifting beneath their feet, and they are just as concerned as partners about potentially being pushed aside. To the extent that there are concerns about the health of the company as a whole, partners in particular will flee: no one wants to be the last on a sinking ship. If you’re noticing an increase in partner turnover at your company, it could be a sign that you too should look elsewhere.