Although Congress has not yet passed the economic support package to support the sub-prime crisis, we can anticipate and plan for its impact on law firms as employers. We spoke to a number of law firm managing partners and administrators who experienced the 1986 bailout of the savings and loan industry and the 2000 burst of the tech bubble. One of the principal lessons learned is that the response of individuals (regardless of whether they are partners, associates, managers or staff) is often based more on what is reported by the media than their actual personal situation. 

Most of the people we talked to advised that reactions may be counter intuitive and quite volatile. The expected response from employees to bad economic news might be thankfulness that they have a job. Yet, in past recessions, some employees became despondent and pessimistic, as if they expected to lose their job and were taking psychological actions to prepare themselves for bad news. One of the most common issues reported to us by the experienced administrators was lack of energy and enthusiasm, minimum performance, and incidences of insubordination and discourtesy. As one administrator described the change, “It was as if our firm’s culture was suspended; all the stuff we valued was ignored.”  

When such situations occur unexpectedly, there can be a tendency to react with different degrees of severity with each case. The advice in such situations is to create clear standards of acceptable performance and behavior and precedents for dealing with problems to ensure uniformity.