Written by Norman Clark
Published: 15 July 2013
Hits: 3769

This is the second of a series of four posts that outline issues that law firms should consider today in order to be prepared for future recessions... or worse.

Cash is the life blood of a law firm at any time, and it is critical to survival in a troubled economy. Recessions typically result in cash-flow crunches, especially for small and midsize firms, which usually are less able to offset decreased demand in "up side" practice areas with increased needs for counter-cyclical services such as insolvency, restructuring, and litigation. Cash-flow problems are exacerbated as accounts receivable get older. Lines of credit become shorter and more expensive to access. This affects law firms of all sizes, but for small and mid-size law firms lines of credit often disappear completely.

To assess how recession-proof your firm is, consider these cash questions:

Even the best-managed law firms can sometimes find in these questions some significant opportunities to become better prepared to respond the future economic trends.