As we have seen on the evening news, in the local newspapers and even on the front page of The Legal Intelligencer, the global economic downturn has affected almost every aspect of our domestic and local economy. Nationally, the legal industry, once considered to be fairly recession resistant, is also feeling the effects of this economic downturn.

Firms that grew during the economic boom years and employed greater numbers of associates in an effort to meet the needs of their clients and to increase their market shares are now laying off attorneys and staff. Unfortunately, law firms and corporate legal departments in the Philadelphia metropolitan area are no exception.

It seems every week there is an announcement that another large Philadelphia firm is laying off attorneys and staff; cutting or holding steady associate and staff salaries; reducing partner compensation; curtailing its hiring and recruitment efforts; and delaying the start date of newly hired associates. In the unfortunate extreme, the impending dissolution of one of Philadelphia's largest and most prestigious law firms was recently announced.

In fact, over the last six months, reportedly more than 250 attorneys have been laid off by larger Philadelphia law firms and many firms have acknowledged that the reason for the layoffs is the slumping economy. Additionally, an unreported number of attorneys at smaller firms also have been let go or asked to accept reduced compensation or restructure their employment agreements to remain with their respective firms. Furthermore, an even greater number of firms, corporate law departments and government law offices have instituted hiring freezes and will not be able to employ new attorneys this year as a result of budget cutbacks.

Although the layoff of 250 attorneys and the hiring freezes affect a small percentage of the more than 10,000 attorneys working in the greater Philadelphia area, the impact on the legal community is felt and is appreciable. Additionally, there is the thought that there may still be more layoffs, cutbacks and changes to come as firms attempt to negotiate the effects of these volatile economic times.

As firms react to the downturn, financial resources dedicated to recruitment, including the recruitment of diverse attorneys, may potentially be targeted for cutbacks. However, fewer dollars should not mean the lessening of a firm's diversity efforts. Nor should the weak economy be used as an excuse to disproportionately affect a firm's diversity efforts. To the contrary, good business sense dictates that, in a weak economy, diversity efforts must be part of a firm's long-range plans.

As we are all aware, our local economy is directly related to the global economy. The global economy is a diverse place and those firms that realize this fact can maximize the talents and skills that their diverse attorneys bring to the table to add to the firms' bottom lines.

Further, the economy is slowly showing signs of stability and consumers are again showing some confidence in the world's markets. Last month was reportedly the best month for the Dow Jones stock market since October 2002. Hopefully, the economy will begin a full recovery.

Meanwhile, firms must decide where to and where not to trim their budgets. Accordingly, a firm's diversity efforts may refocus from the potentially financially elaborate efforts of large marketing events, long distance recruiting or expensive retreats designed to attract new diverse associates and grow into an initiative designed to train, develop and mentor the diverse attorneys already at the firm.

Diversity efforts are more than financial expenditures. Diversity efforts reflect the core values of the firm and its decision to invest in the future. The investments in people will pay off, do pay off and have paid off for the firm. Although the economic downturn should not differentially reduce the hiring of diverse candidates -- if a firm is hiring, it should continue to try to attract some of the many strong diverse candidates who are available -- recruitment may not be the main focus of the firm's diversity efforts. In fact, the refocusing of the firm's main efforts from recruitment to mentoring, training, developing and retaining its current diverse attorneys may be the best plan to position the firm for the future.

Retention and mentoring are much more difficult than recruiting. Even those firms that have increased their marketing, hiring and recruitment of diverse candidates over the last few years have not been as successful at retaining diverse attorneys as originally hoped or anticipated. Active mentoring at all levels may help to increase retention rates and develop better attorneys who feel as if they are part of and have a future at the firm.

As has been often stated: Law firms do not manufacture widgets! We do not have an inventory of product in a warehouse waiting to be sold or purchased. Our valuable assets are our people and their abilities to resolve our clients' problems. As any good business knows, when you cannot recruit as freely as you did in the past, taking the time to train and mentor those employees you have to become better and more profitable members of your organization becomes even more important. It is the best use of your business and personnel resources.

Diverse associates and diversity programs are no exception to this common sense rule. Now is the time to focus internally and invest the time to fully develop those diverse associates hired over the past several years. By mentoring and developing the diverse associates into the successful attorneys that we believed they could become when they were hired, firms will see the return on their investment. The better and more diverse and flexible our people and practices, the better we are able to weather the economic storms during bad periods and the better we are able to service our clients when there is a boom of new business to attract.

In both lean and prosperous times, for a firm to survive, it must develop and grow its non-tangible assets, which are its younger attorneys. If these younger attorneys are not developed to handle the work within the firm and trained to meet the challenges the future will bring, the firm will lose in the long run.

Admittedly, few downturns in the past have been as dramatic or simultaneously have had such an across-the-board effect on as many aspects of the practice of law as the current downturn. But the current economic downturn is not the first economic downturn that many in the legal profession have faced. Those firms that retain their core values, including their diversity initiatives, stand to weather the storm better than those that fail to do so. Many may recall the effects of the dot-com bust, the last real estate downturn, the softening of the insurance markets or past drops in the stock market, and how each affected the legal profession.

As an example, nearly a decade ago, the Dow Jones stock market grew from 10,000 to 11,000 in the spring of 1999. Immediately thereafter, the market began to slump and it eventually tumbled to 7,300 by the fall of 2002. The 2002 crash was fueled by falling corporate profits and affected the prosperity of many other companies.

However, the market eventually rebounded and grew to over 14,000 in 2007. The growth was accompanied by the realization that many decision makers within the clients that we serve and their consumers had changed over time and were becoming more diverse. The diverse clients sought law firms that also embraced the concept of diversity.

Additionally, many firms realized the business need to incorporate diverse attorneys into their organizations because of the development within their client bases and the financial opportunities made available as a result. Many firms proactively incorporated diversity as a core principle of the organization because it was the right thing to do and because it made, and still makes, good business sense. However, with the failing economy some may wonder if diversity is still a financially viable option for law firms.

The question is best answered by the fact that our clients for their business purposes are also tightening their belts but retaining diversity as a core business value. The reason for retaining diversity as a core value is best stated in a recent article contained in the at Minority Corporate Counsel Web publication, Diversity & The Bar, titled "Staying the Course" by Chana Garcia.

The article stated:

By incorporating diversity practices into their long-term business goals, organizations have the added advantage of leveraging what their employees bring to the table. With nearly 46 percent of the revenues of S&P 500 companies coming from outside the United States, having a workforce composed of people with varied experiences and perspectives is a smart business move. 'As the leadership of the corporate world changes, human nature remains the same,' states Glenn B. Fischer, vice president of wealth management at Smith Barney. 'We gravitate toward those who show us empathy and those who we feel understand us. Often, having a cultural connection is that difference between a new client and a missed opportunity.'

Therefore, as the economy recovers, those firms that retain diversity as a core value and retain and develop their diverse attorneys to assist in the growth of new business may have an advantage over firms that fail to do so. As stated, nearly half of the revenues of our largest clients are generated from sources outside of the United States and failing to realize how diversity plays a role in the client's overall business goals will result in missed opportunity.

Over the past several years, many Philadelphia firms and corporate legal departments have incorporated the concept of diversifying their attorney staff as a core value of their organizations. As a result, diverse attorneys are currently progressing at different stages in many law firms in the city. It would be imprudent and a waste of assets for any firm to throw away the investment it has made in diversity in general and these diverse attorneys in particular by failing to fully develop them because of the recent economic downturn. Instead, firms should look for ways to mentor, develop and strengthen the diverse attorneys in the organization. By doing so, the firm's financial bottom line will be the ultimate winner. •

Wesley R. Payne is a partner at White & Williams. He is the chairman of the firm's diversity committee, a member of the operations and budget committees, and co-chairman of the firm's homeless advocacy practice group. He primarily focuses his practice in the areas of insurance defense, bad faith, extra-contractual damages and coverage litigation. Payne may be reached at paynew@whiteandwilliams.com .