The tsunami of financial services catastrophes has now swept up everyone, including law firms. Not a week goes by without another story of law firm layoffs or office closings, as corporate clients are reigning in and postponing legal work while asking for discounts, write-offs and extended payment terms.

These economic times could prove to be the death knell for firms lacking a broad client base, a sound strategy for survival, a practice mix that fits the times, and the cultural glue that binds professionals together during a storm of uncertainty.

But other firms will undoubtedly emerge from the coming shakeout stronger than ever: those that have adopted a sense of mission and values; those that have systematically acquired a broad base of clients; and those that have adopted business strategies to weather the storm by providing a recession-resistant practice mix. These firms will also survive to scoop up the high-quality lateral partners who are stranded on the decks of other sinking ships.

The management at forward-thinking firms will also use these times of crisis as an opportunity to make additional strategic changes. They will assess not only what is working and what is not, but what will work in the future as clients demand greater efficiencies and measurable returns on legal investment. Visionary lawyers, rather than adhering to precedent and managing through the rear view mirror, will confront the difficult fundamental questions about the long-term functionality of their business models, service approaches, marketing plans, staffing strategies, professional development, compensation schemes, and management-leadership styles.

Some firms have already started the process of serious self-examination, adopting client-driven solutions to threatening problems. Based on what we have already seen, it is possible that we will one day remember this as a time when successful firms started to:

• Seek the input of clients on fundamental strategy, similar to the way that some businesses have put major clients or customers on their governing boards;
• Move from the need for consensus in favor of some degree of vigorous debate and compromise to achieve forward momentum;
• Motivate people and bring them together as a team by appealing to their need for a common purpose, mission and values;
• Recognize that long-term profitability is based how efficiently you service clients, grow them, and retain them;
• Focus on productivity (shrinking the hours per matter and increasing the number of matters per lawyer) just like every other industry does;
• Provide more fixed fee arrangements that clients prefer when budgeting for repetitive tasks (such as IP filings and litigation support) or common transactions (stock offerings or mergers);
• Move away from bidding wars for the top 10 percent at the top 10 law schools and put the money saved into practice skills training (recognizing that many top talents will trade money for better training and work environment);
• Move away from hypercompetitive “eat what you kill” compensation schemes toward arrangements that value lawyers who give great service, train others, refer business to partners, and generally perform as a team;
• Move away from expensive and unpopular “up or out” schemes and institute alternative career paths with alternative equitable compensation schemes;
• Encourage telecommuting and low overhead office arrangements (such as shared offices or cubes) for those with alternative/flex hours;
• Use more technology solutions to automate repetitive tasks, such as document discovery and production so that more work is done at lower cost; and
• Put talented lawyers into dual-role “flex” positions (i.e., real estate and bankruptcy) so that they can move flexibly with the economy (similar to the way pro sports teams are using athletes who can fill more than one role).

If leading firms successfully tackle even a handful of these challenges, then we might one day remember these trying times as the era when newer, better practices were forged that made employees and clients alike much happier.