Sunday, January 24, 2010

A Return To Business, But Not As Usual

We are an optimistic species.

The ABA Journal ran a recent article titled "Managing Partners More Confident, Expect Increased Legal Work".

The upshot of the article is that a recent survey showed that the "confidence index" of managing partners is at a three-year high based on a belief that the worst of the recession is behind us, coupled with an anticipated increase in demand for services.

However, the article then slides in one other bit of information, almost as an afterthought:
"Managing partners aren’t as confident about revenue increases as they are about an increase in demand. The reason is client pressure to discount fees or offer alternative billings."
That's one heck of a caveat.

The literal translation might be: "Business demand will return to normal, but "normal" might have been redefined in the interim."

An interesting parallel can be found in the recent Detroit Auto Show. We all know the automotive industry is the poster child for the economic challenges of 2008/2009, so it was interesting to read this one-two punch from a recent Reuters article:

"In 2009, we discovered we have a new competitor that we have never dealt with before, and it's savings," Jim McDowell, American head of BMW's Mini unit, told Reuters. "Anything that throws major elements of uncertainty in front of the consumer are the kinds of things that could depress sales."

Followed by:

"But ultimately sales will increase because the car fleet is getting older and older," he added.

The parallels between the industries are apparent: Demand will return, but the nature of the game has changed.

The lesson here is that the impact of 2009 is not going to gently fade away. 2009 seems to be solidifying itself as a bell that can't be un-rung.

2009 was traumatic enough -- the ground shook enough -- that our perspective seems to have irrevocably shifted.

No comments: