Almost every day on twitter or in the legal press there are stories of law firms cutting lawyers and/or staff. As I write this post according to The Lawyer the total UK legal redundancies stand at 2727. In fact it may be easier to reel off a list of those firms that haven’t yet made layoffs (note I say yet, I would bet that layoffs are being considered across all firms)

So is this recession worse than 1980’s? Are companies really in bad shape?

I read an article recently on two types of recession:

• “boring recession” – troughs in the business cycle e.g. 1989-1992
• “dramatic recession” – big transformations in the economy. e.g. 1980-1982

The article above points out that the early eighties recession stripped out much outdated manufacturing, mining etc. The recession forcing the market to do exactly what markets do and correct itself.

So what category is this recession? Boring or Dramatic? I’m going to take a guess at dramatic, but this time it’s not blue collar industries that the market is correcting, but white collar ones!

This is the reason we’re seeing so many law firms shedding jobs. Though it’ll probably take more than this wave of layoffs to “correct the market”. I don’t think we’ll see another wave of redundancies, as I think a lot of firms will have stripped out the numbers they can afford to lose without compromising the organisations. What I do think though is that we’ll start to see radical changes in law firms; new billing models, exploitation of technology (to take a quote “no longer need clerks and pupils to search libraries, copy forms and wrap bundles in pink ribbon”), commoditisation of legal work etc.

But I think the biggest impact we’ll see though is in the upturn. This time there are many more well educated, ambitious, highly talented people that have been made redundant. Some of these will “rebel” against the old way of doing law, they’ll not go back to working for one of the old firms and they’ll start new firms. There was a wave of small business entrepreneurs that came out of the last dramatic recession, this time those entrepreneurs could end up completely reshaping delivery of legal services. (it may not take the upturn to bring this about, I saw an article today which shows this could be already starting to happen!)

It’ll be interesting to see how the current Lawyer UK 100 and AmLaw 100 keep up! Who’ll do a Microsoft and shift like they did when they turned 180 degree and embraced the internet and who will be the Lotus sitting back complaining that that upstart Microsoft didn’t do things their way and took their business away?