Recession Realities

Has "Get-up-and-brush-your-teeth" been replaced by "Get-up-and-refresh-the-browser"? Do you find yourself trapped in a Groundhog Day of market collapses, credit crises and impending layoffs? Are you asking yourself, "If fewer people buy what my company sells, what does that mean for my legal team?"

Until 2006, like most of those who started practicing in the 1990s or later, I'd generally only experienced a trend that was up and to the right.

In the semiconductor industry, however, crises are a regular occurrence. Industry recessions occur every few years as multiple customers race to be first to market. The fact that customers (and their financiers) have become a bit smarter about this over time is called "the rational allocation of capital."

In learning the ropes, I benefited from the counsel of more experienced hands. Based upon that effort, below are some lessons learned:

Maintaining motivation is hard in small departments. Upward mobility is limited; lateral mobility more so. Lack of growth decreases mobility further.

Variable costs are better than fixed costs, and employees are fixed costs. The only thing more expensive than hiring a full-time employee is firing one.

In-house practice isn't easier--just (potentially) less lucrative. If you're reading this magazine, you know that "in-house is easier" is a myth. Accordingly, stalled growth and underwater options lead to itchy feet.

To deal with the above phenomena, we've seen the adoption of the following recommendations:

Hire fewer people; give them bigger jobs. Hire an IP lawyer and teach her to prepare the proxy. Find a way to build the bullets on their resumes that will get them their next job. To make sure the common questions continue to get answered, build wikis, make them available for outside counsel to edit and roll them out to internal personnel.

Pay them more. You've just given them bigger jobs, so be ready to pro forma the Radford data. If the finance or HR departments push back, tell them you're driving to increase revenue per person, and that you're focused on making legal costs vary with the business. Talk (on both sides) is cheap, though: You need to actively survey your internal clients, anonymously and otherwise, to make sure you and your people are walking the walk.

21st Century Management. Simply managing law firms alone doesn't count. They're well paid to take orders (while telling you how smart and good-looking you are). Instead, your employees should be actively sourcing, vetting and training outside vendors. That associate who left on paternity leave might be available to review non-disclosure agreements from home. Using your network to reaggregate disaggregated resources is a core 21st century skill.

Break the Hourly-Fee-For-Service Mold. Is this the year more clients move to the Fenwick & West Model? Is this the year law firms use Legal OnRamp to make their work product available to prospective clients? Is this the year law firms look at their projections and realize they need to find new ways to work with their clients?

Mutual Timetable. A wise man once told me good lawyers reinvent their practices every three to five years. He didn't mention an in-house counsel exception.

Accordingly, look to train one or more members of your team to do your job within that time frame. And while they're learning from you, you need to learn from others how to do something else.

Whether someone on your staff gets your job is not the point. Strive to put your personnel in a position to do a bigger job if and when that opportunity comes. If your company is growing again by then, you'll have well-trained colleagues. If not, you'll end up with either a successor or a grateful peer now paying forward the lessons you learned in this downturn.

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