Surviving the Recession

Law firms just like every other business, family and individuals are feeling the impact of a looming recession. At Wright Hassall we can’t claim to have a recipe for surviving the downturn, but we can offer some guidance based on how we are working with clients and internally to deal with the current economic climate.

Step 1 - Manage cashflow.

Banks are no longer going to be so accommodating with requests for increased overdraft or loan facilities and may well look to reduce their exposures, so anything you can do to control your net cash position will be vital.

One client we recently advised saw orders to a big national retailer actually increasing – but then learned that its credit insurer was restricting cover. With the customer pressing for ever bigger deliveries and ever longer settlement periods it took courage to follow our advice to cut back on shipments and demand advance payments – but when the company went into administration the client was better protected than many others.

Step 2 - Cut costs.

The temptation may be to draw up a cashflow forecast based on soaring sales and increased margins – but in the present climate you may find no-one, least of all your bank, ready to believe such optimism unless it’s matched by real attempts to trim unnecessary overheads. We have worked with some clients to negotiate better deals from suppliers while others have explored outsourcing non-core functions.

When we got a call from a client saying that the warehouse where he kept virtually all his stock had gone under – right at the start of the pre-Xmas trading period - our insolvency and commercial teams worked jointly to secure the release of several lorry-loads of inventory within 2 days. We also negotiated an alternative distribution facility with proper recognition of the property rights in our client’s stock.

Step 3 – Maintain marketing.

Many successful companies know how to improve their competitive position by controlling costs, improving performance in key areas of their business and enhance their abilities to compete and win. Or in other words –“don’t cut back on marketing in a downturn”. From what we are seeing, the trick is to invest your marketing efforts in developing the way you offer your goods or services to better suit the climate customers face right now, thereby not only retaining your market share but more than likely winning business from competitors.

With that in mind, across all the services Wright Hassall can provide, we are making sure that every job we do is done to a pre-agreed budget. In fact, as often as not, our business clients know we are working to fixed or capped costs.

Step 4 - Build relationships.  

It’s important that your business doesn’t just focus on strengthening the bottom line and completely overlook investment, whether in plant, better technology or improved strategies to secure and expand your customer base. Our view is that now is the time for building customer relationships. While the credit crunch continues the way a business is perceived by its customers can be of huge value. Customers are feeling uneasy and the changes all around can be disconcerting. This makes reinforcing customer relationships more critical than ever.

At Wright Hassall we are making significant new investments in technology, in people, and in achieving energy efficiency in all that we do. For an up-to-the-minute flavour of how we are getting on, why not try out our increasingly dynamic website.

Step 5 - Seek opportunities.

Despite all that’s going on around us, we continue to hear from plenty of entrepreneurial clients that the global financial difficulties have not had a significant effect on their business. Many see increased opportunities, with the economic climate creating opportunities to acquire businesses or key assets at lower costs, to broaden their customer bases, and to exploit gaps to enter new markets created by the financial uncertainty.

Wright Hassall’s corporate team has more than held its position despite the economic downturn, posting an increase in business, winning new clients and recruiting several significant new lawyers. We are seeing strong growth in work for the financial services sector, in restructuring and asset protection work, and in large-scale outsourcings. Company and business acquisitions have also held up extremely well as buyers snap up businesses at bargain values. We finished 2008 by adding to the team specialists in corporate immigration and in employee incentives/corporate tax.

Of course, we couldn’t have done any of this without the most important factor - our clients. All the partners, lawyers and staff right across the firm will be working hard throughout 2009 and beyond to make sure that we pull through challenging times together.