Bar News - February 13, 2009
How NH Law Firms Are Weathering the Economic Storm
By: Craig Sander
Yankee frugality and diversified business practice may be helping shield New Hampshire from the worst of the economic crisis, but economists say that things are going to get worse before they get better. That, attorneys say, means both good things and bad for the NH legal community.
Russ Thibeault, president of Applied Economic Research in Laconia, says that though New Hampshire is doing well when compared to the national average, he does expect unemployment to continue its rise and expects the economy to contract until mid-2010.
"It’s going to be a tough year for the US economy and a tough year for the New Hampshire economy," Thibeault said. "We’re seeing retirement accounts being affected and severe job losses in a wide variety of sectors."
Retail spending in the state is far below average, the state’s Real Estate Transfer Tax is down nearly 20 percent and the state’s business enterprise and business profits tax revenues are down.
"Everyone is being much more careful. I get the sense that there’s an attitude to hold-the-line on spending," he said.
The solution to the problem, Thibeault says, is going to come from Washington.
"The problems that are dragging New Hampshire down are by-and-large things that happened beyond our borders but affect us," he said. "The largest things we can do in-state are dwarfed by the effect of the success or failure of the changes happening in Washington right now."
Impact on Law Practice Areas
Since the economy started shrinking six months ago, several law practice areas have undergone significant changes, leaving many specialized firms at a distinct disadvantage. However, firms with diverse practice areas and firms that specialize in certain areas are seeing significant upswings in business.
The collapse of finance giants Lehman Brothers, Merrill Lynch and others, combined with the fall of mortgage companies Fannie Mae and Freddie Mac, have drastically changed the state’s active practice areas.
In New Hampshire, several practice areas are significantly down. Real estate, corporate, banking and municipal law appear to be the hardest hit.
"Our corporate practice was a little slower this year. With credit frozen, there’s not much movement, so everybody is waiting for the stimulus to come through," said McLane, Graf, Raulerson & Middleton Executive Director Mike McClusky. "Though, in the go-go days of the real estate boom people were doing titles and what-not without an attorney. Now, these things are coming back for legal review, so we’re seeing some new activity in that area."
Conversely, with foreclosure rates and bankruptcy filings increasing, demand in these areas has skyrocketed.
"We’re booking several weeks out," said Mark Cornell of Cornell & Ovitt-Puc in Concord. "I worked primarily in bankruptcies for the past few years and always had other practice areas I’d work in on the side. Now I’m at the point where if I get anything [but bankruptcy cases], I’m referring it out because it’s just too much."
Cornell predicts that the number of bankruptcy cases he handles will continue to rise well into this year.
Demand for employment law services are sharply up as well. Whether it’s a company looking to trim costs and conduct layoffs or an employee filing suit after being laid off, the market for these services, too, seems likely to climb well into the year.
"We are working with companies . . . to determine which positions can be eliminated and how that can be done lawfully. In good times, we help clients grow. In bad times, it’s the opposite," said Sulloway & Hollis attorney Edward Kaplan. "I see things continuing in a pretty constant manner."
Thomas Flygare, a partner at Flygare, Schwarz & Closson in Exeter, represents municipalities in employment issues and is also seeing an increase in business.
"I think the biggest change I’ve seen over the past six months is quite a growth in the number of new unions and the expansion of existing unions," said Flygare. "We’re also getting a lot of calls about severance agreements and about the legalities of layoffs."
Indirectly related to the economic crisis, family law practice has seen some significant changes recently. Solo- and small-firm family law practitioners may be seeing a decreased caseload due to the inability of low- and middle-income clients to pay legal fees.
"I’m getting a lot more consultations for divorce cases these days, but those aren’t always leading to a case," said Kelly Ovitt-Puc of Cornell & Ovitt-Puc in Concord. "I’m also seeing a lot of people come in post-divorce because the terms of a divorce were based on a mortgage that is now in default."
Meanwhile, some larger firms are seeing divorce practice surge as typically well-financed clients split up in the face of hard times.
Unaffected by the economy, the healthcare sector of the economy, and by proxy, healthcare law is seeing a continued growth.
Adapting to the New Climate
Prudent business decisions now, say economists, can help your firm through times. Here are some tips for cutting costs and expanding your practice even in troubled times.
• Negotiate with vendors and suppliers Try to work out new contracts with food suppliers, office supply vendors, etc. Tough economic times mean that businesses are increasingly inclined to negotiate.
• Explore new market areas. Are there new geographic regions you could practice in? If you have a license to practice in another state, have you considered expanding your market?
• Do in-house what used to be outsourced. For example, if you have been outsourcing e-Discovery or other legal services, see if you can do them in-house at the same level of quality. If so, completing the work on your own will save you money that you can pass on to your clients.
• Avoid traveling expenses as much as possible. Schedule meetings at your office more often instead of driving off-site. Try to set up meetings at mid-points between attorney and client if possible rather than having one party drive a long distance.
• Try out new fee structures. Do you offer fixed cost billing? Maybe now is the time to try it out. Offer it side-by-side with your traditional hourly rate and gauge the response.
• Develop skills by working pro bono. If things are slow around the office, take on a pro bono case by calling the NHBA Pro Bono Program. You may even find you enjoy a practice area different from the one you normally practice.
• Continue marketing efforts. Never stop marketing. First and foremost, stay in touch with your clients. Also, try a website redesign, search engine optimization or create a Facebook identity. Some of the best ways to enhance your marketing won’t cost you a dime.
Stay tuned to future issues of Bar News where we will be covering further effects of the economic downturn and providing tips and resources on weathering the storm.