In August 2006, well before the current economic downturn, HP CEO Mark Hurd explained his philosophy on cost control to the New York Times:
”Costs and growth are different sides of the same coin,” he said. ”We will spend money to save money and save money to spend money. We will never be done looking at our cost structure.”
For strategically disciplined companies, cost control didn’t start this year and won’t end next year.
Contrast this viewpoint with a recent look at the state of law firm financial discipline from law.com. According to one industry advisor:
“Law firms were very effective at reducing expenses,” … “Now they are saying, ‘We’ve cut to the bone. We can’t cut expenses any more. Now we need to look at areas we can grow our revenues.'”
“…2010 could be a fairly good year. “Firms are much more efficient. They’re lean and mean and ready to profit.”
From a headcount perspective, some firms may have started to look at the problem. From rates and matter staffing, general overheads, and especially the use of technology, many firms haven’t even started. Their clients are years ahead of them and aren’t slowing down.
So I come out on the Mark Hurd side of the cost control coin: you are never done. Here’s one look at the client waters some large law firms may be sailing into: