It’s helpful in times like these for leadership teams to have a common understanding of what’s going on in the broader economy, its implications for law firm demand and a road map for how to tackle the difficult decisions ahead. The following offers such a framing.

Let’s start with the economy. We’ve entered a recession. We can think of it as ultimately having one of three shapes:

  • V-shaped: workers stay home causing a dip in economic output; the dip is followed relatively quickly by a recovery in which workers put in overtime to make up for lost productivity; the economy regains its pre-dip trajectory in a matter of weeks.
  • U-shaped: the above initial dip in economic output is accompanied by a decline in consumer demand reflecting, among other issues, a contraction in household wealth (home values, retirement assets, etc.); the policy makers take responsive fiscal and monetary measures and economic activity returns to pre-dip growth rate in a matter of months.
  • L-shaped: the recession starts out as U-shaped, but the policy interventions prove ineffective and the dip is prolonged into quarters and years.

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