Thriving in a Downturn: How to Recession-Proof Your Law Firm

5 min read

Here’s what you should know about the coming economic storm.

Canada may not officially be in a recession, but you might not know that from the current market and economic conditions facing both businesses and consumers. According to PwC’s 2025 holiday outlook economic report, Canadian consumers are planning to spend 10% less this winter holiday season than the year prior; this comes on the back of Canada’s economy contracting by 1.6% in 2025-Q2. American President Donald Trump’s trade war against Canada is causing a drag on economic growth on both sides of the border; while economists predict that Canada will narrowly avoid a recession this fall, there will be “localized”recessions in southwestern Ontario. Meanwhile, in the United States 22 states are either at high risk of a recession or are already in one. 

As economic conditions worsen, it’s important for law firms and in-house legal departments in both Canada and the United States to prepare for a downturn. Clients will no doubt be tightening their belts, which means in-house legal professionals will have to find more ways to do more with less. Law firms, meanwhile, will need to focus on client acquisition and retention if they wish to weather the downturn. Here are just a few ways that in-house legal departments and law firms can prepare for the oncoming storm.

Prioritize Necessary Expenses over Luxuries

If you’ve never done an internal cost audit, now is the time to perform one. Review all of your firm’s monthly, yearly, and one-off expenses to determine which ones are necessities and which ones are luxuries. 

Office Wi-Fi? Necessity. Expensive client lunches on the firm? Luxury. 

Office Christmas party to maintain morale? Necessity. Hiring Michael Bublé to perform at the Christmas party? Luxury.

Small gifts to woo new clients? Necessity. NHL tickets for potential new clients? Luxury.

You may also want to adjust the level of service you have with your service providers. For example, if your team is just sending emails back and forth all day, you probably don’t need 1-gigabyte-per-second fibre-optic Internet; a normal high-speed connection will work just fine.

Cozy Up to Current & Potential Clients

During an economic downturn, you’ll want to ensure you give an even higher level of client service than the excellent service you typically give. Clients are also looking to slash their budgets, and one area where they may be looking to cut down on spending is on legal costs. Give your clients a reason to keep spending with you. Make an intentional effort to strengthen your client relationships by having real conversations with your clients, listening to their plights and challenges and proposing solutions. Remember: It costs 7 times more money to acquire a new client than to keep an existing one.

Speaking of acquiring new clients, now is the time when you’ll want to focus on doing exactly that. While advertising and marketing spending is easy to cut, that’s the absolute last area where you should be making cuts during a recession. Your marketing and advertising dollars aren’t an expense, they’re an investment. Other law firms will be cutting back on marketing during the downturn, so now is your opportunity to scoop up easy market share and snag the new clients your competitors will no doubt miss out on. Take a look at your firm’s overall budget and look for ways you can shift more of your budget toward marketing initiatives with strong ROI.

Diversify Your Services

When a recession hits, clients’ legal needs change. Lawyer David Aylor, founder and CEO of David Aylor Law Offices in South Carolina, told Legal Management, the magazine of the Association of Legal Administrators, in 2022 that law firms are relatively recession-proof as long as they diversify their services. Aylor noted that law firms specializing in business and corporate law tend to see the most substantial hit from recessions, which is why diversifying services by offering another type of legal practice is a smart way to recession-proof your firm.

If your firm only practices one or two types of law, or only works with certain types of clients, you’re at a higher risk of recession-induced losses in the event that a recession hits your biggest clients hard. In the 2000s when the DotCom bubble burst, for example, California-based Brobeck, Phleger & Harrison LLP, a BigLaw firm with 1,100 employees, went bankrupt after suffering substantial losses. The firm, which was founded in 1926, specialized in representing technology clients like Cisco, Nokia, and Sun Microsystems. During the 1990s, the firm began accepting equity from technology companies instead of cash as payment for services. When the DotCom bubble burst, these shares became worthless, and partners moved to other firms. In 2003, Brobeck, Phleger & Harrison filed for Chapter 7 bankruptcy.

The lesson from this firm’s failure? Diversify your services and your client base. Even if a recession hits one or two industries, having a diverse client roster means you’ll still have work to fall back on.

Leverage Legal Technology to Cut Costs

While cutting your budget is something you’ll be tempted to do, one area where you’ll want to invest more money is in legal technology. Legaltech solutions like e-signing tools, practice management apps, and document automation & entity management suites can all help you to cut other costs at your firm, such as paper printing costs, time spent on administrative tasks, and even office footprint. With a platform like Appara, for example, you can automate routine tasks, freeing up your team to focus on revenue-generating activities – which they’ll need to do if you want to survive the recession.

Appara also makes it easy to automate document creation, automate workflows and transactions, reduce errors in record-keeping, and secure your data. With Appara, you can leverage client questionnaires and data extraction tools to reduce manual data input, further cutting admin costs. Plus, you can generate unique, customizable documents in minutes instead of hours – saving your team precious time. (At RDM Lawyers in Abbotsford, British Columbia, for instance, adopting Appara led to a 2X increase in the number of companies incorporated per month as well as a 75% decrease in the amount of time spent on administrative tasks.)

Recession-proofing your firm is an essential activity that will prepare you to thrive during the coming economic downturn. From prioritizing necessary expenses over luxuries and diversifying services, to strengthening client relationships and more, there are plenty of steps your firm can take to ensure you stay the course during the storm. Who knows? With the right preparation and smart decision-making, you could come out of the downturn on better footing than you were before.

Are you looking to cut administrative costs, reduce errors, and increase your firm’s productivity? We can help. Contact Appara today to book a demo and start your FREE trial.