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“Collaborative Wisdom in Tough Times,” by Stacey Romberg and Michelle Bomberger

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King County Bar Bulletin – June 2009

By Stacey L. Romberg

As noted in my January 2009 Bar Bulletin article “Are King County Lawyers in Distress?” according to the ABA Journal Weekly Newsletter, “The number of people working in legal services has dropped by nearly 12,000 in the last year.” Now, midway through 2009, a clearer picture has emerged of the economic downturn’s impact on lawyers nationally and locally.

Recently, I had lunch with “Jessica,” a young, personable female lawyer who recently graduated from law school. Jessica anxiously showed me her résumé, hoping that I could help. Her résumé listed an impressive array of law school-related awards, journal experience, pertinent work experience, and all the bells and whistles of a highly marketable law school graduate. The problem? Jessica graduated in 2008 — not 2009.

Like many of her law school classmates, she has been unable to secure full-time employment. Jessica works as a contract attorney for several different local firms, who pay her $20/hour while billing her out at close to $200/hour. These firms can maintain this inequitable practice because, if Jessica requests a fair wage, they can easily replace her with a multitude of eager, unemployed young lawyers.

In examining the legal market, locally and nationally, Jessica’s dilemma is apparent. Times are tough. In January, 1,487 legal jobs were eliminated at major firms. The affected firms included at least one with a local presence, Wilson Sonsini, which laid off 45 lawyers and 68 staff.1

In February, the statistics worsened with, at conservative estimate, 2,000 attorneys and staff losing their jobs.2 February 12, referred to in legal publications as “Bloody Thursday,” saw 793 layoffs by notable law firms.3 On March 9, three major firms reported 737 total layoffs, including local powerhouse K&L Gates, which eliminated 121 attorney and staff positions. In April, although figures were not available at press time, preliminary reports indicate that the volume of layoffs has, thankfully, slowed.4

The economy has affected law firms in other ways. These include reducing pay for attorneys and staff; eliminating or postponing step salary increases for associates; postponing start dates for associates (which may or may not include some sort of “deferral stipend” paid to the associates to secure their commitment to wait); axing summer associate programs; requesting capital contributions from partners; shifting income partners over to equity status; and offering “buy out deals,” which essentially encourage voluntary attrition by basing the amount of severance packages on levels of seniority.

In addition to the K&L Gates layoffs, Perkins Coie recently laid off 12 associates and 26 staff, imposed a 10-percent reduction in partner income and an associate pay freeze, and also instituted a three-month delay for new associates scheduled to join the firm in the fall with a $7,500 deferral payment. Davis Wright Tremaine also has deferred its start date for new associates by three months and cut associate pay by five percent.5

As the job market tightens, keep in mind that the University of Washington and Seattle University law schools will soon be sending their 2009 graduates out into the Seattle legal market to compete with 2008 graduates such as Jessica.

Stacey L. Romberg, Attorney at Law, focuses her practice on business law, estate planning and probate. She can be reached at

By Michelle Bomberger

As we all navigate these uncertain times, the question arises, “How does a law firm, small or large, sustain itself in this economy?” Your best bet is to hunker down, implement best practices and keep your eye on the ball. A recession is a time for caution with finances, but an opportunity to shine in the marketplace.

Monitor cash flow. We’ve all heard the saying, “Cash is king.” In this economy, it’s more important than ever. One of the most visible impacts of the recession is the dramatic increase in accounts receivable seen by law practices and businesses in general. Some firms are struggling to survive, not because they cannot bring in the work, but because they are not being paid for the work.

The firm’s revenues may very well be stable, but the expenses require attention before the firm receives payment on that revenue. Firms accustomed to a 45-day average for outstanding receivables are now seeing receivables reach 90 days or more as clients hold on to their money or, worse, file for bankruptcy.

Firms must closely monitor the timing of cash coming into and going out of the business. Consider which expenses can be deferred and negotiate payment terms where necessary to help manage the timing of cash in your practice. Of course, obtaining payments in advance is the best way to effectively manage the timing of your cash flow, but that’s not always possible.6

Focus on Business Development. Another major concern is decreased revenues. Clients are holding back on non-essential transactions and seeking better prices in the marketplace. Given falling revenues, firms begin cost cutting.

Often, marketing activities go first. Of course, we realize that this decision is short-sighted, but it’s realistic when cash is limited. Business development, though, can be done on a very tight budget and, regardless of your cash situation, should occur in your business constantly. If you have to cut your marketing budget, make sure that you enhance other areas of business development to maintain your presence in the marketplace.

Proactively reach out to your current clients to better understand what their needs are. Ask them what is changing in their world and how you can help them. Note that their needs for legal services may be different or while their legal demands may be constant, they really need more flexible billing or payment methods to afford your services.

Introduce yourself to others who work with your clients, expressing a very clear value proposition — who you are and what you can do for them. Commit time to social media sites related to your practice area and clients, and build relationships there through the content you can provide. Social media is a free way to introduce yourself to others and position yourself as knowledgeable in a certain field.

Now more than ever, it is critical to know who your clients are and where you can find them. Once you have a clear message to communicate to others about why they should work with you, you should talk to and meet with people constantly.

Remember also that discounting fees does not necessarily bring in more clients or more revenue. Your billing rates make a statement in the marketplace about who you are. If you are unwilling to stand by your rates, it changes the perception of you as a lawyer and businessperson, both now and in the future. Often, a better way to make your services more affordable is to modify your payment terms to make your services more affordable now.

With respect to your practice though, this time should be used to build a healthier practice overall. A recession is not a time for hibernation, but an opportunity to shine and show off why you stand out as exceptional.

Michelle Bomberger is the founder and managing attorney of Equinox Business Law Group (formerly Small Business Legal Services), a law firm serving business owners and entrepreneurs.

1 Martha Neill, “January’s Carnage: 1,487 Law Layoffs,” ABA Journal, January 29, 2009.

2 Martha Neill, “February Free Fall: Major Law Firms Lay Off Another 2,000-Plus Attorneys and Staff,” ABA Journal, February 26, 2009. Please note that these figures appear to be conservative. Law Shucks, a popular legal website ( reports that major law firms laid off 2,708 workers in February (1,104 lawyers, 1,604 staff).

3 Debra Cassens Weiss, “Bloody Thursday Layoffs Also Hit Cozen, Epstein Becker; ‘Big Ones’ Still to Come,” ABA Journal, February 13, 2009.

4 Law Shucks.

5 Rami Grunbaum, “Perkins Coie, the Biggest Seattle-Based Law Firm, is Suddenly a Bit Smaller,” The Seattle Times, April 21, 2009.

6 For more information, please see “End the Aging Process: Control Your A/R,” in the May issue of the Bar Bulletin.

Reprinted with Permission, King County Bar Association, Bar Bulletin-June 2009

Collaborative Wisdom in Tough Times, by Stacey Romberg and Michelle Bomberger


This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.

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