Editor's letter

Does the legal profession do recession?

Talking this month with a senior manager at a mid-tier City law firm got me thinking. Few of us could have failed to miss the tales of financial doom and gloom hitting the newspaper stands over the past quarter. The collapse of the US sub-prime mortgage market, leading to a so-called credit crunch, has resulted in something of a tremor across the financial markets. The Bank of England published warnings back in November that the UK economy could be slowing, and City analysts ever since have been variously forecasting the likelihood of an impending recession.
Against this background, I found myself discussing with said manager the relative merits of business-intelligence (BI) solutions. In the not-too-distant past, he, and his team, had met with a BI solution provider/s to discuss BI options. Impressive though the offerings appeared, he concluded that he could just not justify the time and expense of such an application. Not only was he looking at potentially paying out six figures for the tool, but it would take up time and resources he could ill afford, especially when the firm already had its own fairly satisfactory management reporting techniques. And at some point in this discussion, I began to think that it was all really rather incongruous.
On one side, Deloitte has warned that the UK economy is set to experience its weakest period of growth in 15 years, which may, according to financial data firm Experian result in between 10,000 and 20,000 redundancies from London’s financial-services industry. Here I was, though, talking about a BI solution that would cost a fortune and might not even be needed anyway. Okay, this particular firm decided against making the investment just yet. And perhaps most UK firms are happy with their existing tools or with the BI elements they might get as part of a PMS package like Elite’s 3E. But consider the widespread take-up of BI in US firms, and you wonder just how long it might be before UK firms give in and follow yet another trend from across the pond. And once a few UK firms have bought into this latest technology, it is surely only a matter time before the rest follow – perhaps as much to keep up with the Jones’s as anything else.
Of course, if a recession really did hit, budgets would undoubtedly be cut, and quickly. But there still seems to be something about the legal profession that must seem a gold mine for solution providers. The threat of an increasingly competitive landscape combined with a bit of budget and the allure of differentiation, and many a law firm seems to fall onto the latest technology bandwagon. Perhaps a slowing economy, and with it a barrage of City redundancies, will be the one thing to make law firms stop and really consider what their businesses actually need to survive and thrive.

Caroline Poynton, Editor

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