It's a long way downTen years ago, recession sparked a series of sackings by law firms.

Linda Tsang looks at their chances of weathering the storm this time aroundAs economists predict a downturn in the world's biggest economy across the Atlantic, the lawyers working for UK plc are looking to get leaner and meaner in preparation for any eventuality.Ten years ago was the last time a recession bit hard into the legal profession in Britain, especially at the top end.

In 1991, insolvency practitioners were predicting that corporate failures would reach the 20,000 mark.

And the slowdown was confirmed when the previous year's statistics came through, showing that City firms' involvement in takeover work had fallen by over 90% in 1990.That recession also struck at the entry level to the profession, with only 38% of the 100 biggest law firms reporting that they expected to have vacancies for newly qualified assistants from other firms.

The result was many more solicitors chasing much fewer jobs.Later in the year, there were redundancies across the board, with whole departments being slashed to cut costs.

Mergers - even non-defensive ones - proved unsuccessful, including that of Walker Martineau and Stringer Saul, which lasted just six months.And it was a global recession - the US also suffered from the economic downturn in 1991.

American Lawyer magazine reported an overall decline in partners' profits, which fell 6% to $400,000, while revenues per lawyer fell to $371,000.Ten years on, in the new millennium, have lawyers learned the lessons of the previous downturns, especially in a market of rocketing salaries for assistant solicitors? Giles Rubens, a director at management consultancy Hildebrandt International, says: 'There is a lot of slightly facile advice at such times: that firms should watch costs, move into counter-cyclical areas, such as insolvency, and lay off non-essential staff.'There is some fat in law firms, but not much.

Law firms are increasingly better managed than before, but that does not mean that there is no room for improvement.'One panic measure which is often taken is to lay off junior staff as soon as there is a downturn.

But Mr Rubens says: 'That does not solve the problems, because it means that the senior people are doing work which, in economic terms, is price-sensitive.

The reality of many firms with poor economics is that that is not the solution.

The fairly unpalatable solution is to address that fact that the firm is over-partnered.'And in the long term, blanket redundancies of junior staff can - and indeed have now - lead to shortages of lawyers when the upturn arrives.

The current shortage of commercial lawyers at the four to six-year qualified level is the result of City firms' decision not to take on new recruits, or severely to cut down their number, when students were looking for training contracts in the early 1990s.One partner from a City firm recalls: 'In 1991, no firm panicked and sacked people because they thought that their reputation as employers would be in tatters.

But once one firm bit the bullet and sacked people, the others piled in.

The lesson that firms learned from that was that there was no long-term harm in sacking people.

But there were problems later because so many firms had deferred traineeships and sacked people, and that obviously caught up with them later.

But I think firms will be a lot quicker in downsizing now if there is a recession, rather than waiting for someone else to start the P45s rolling.'He adds that the other quick fix for some firms in the early 1990s was to cut down on premises, and even large City firms in the top 20 had to merge defensively because they had over-extended on property commitments.Not all firms in 1991 had to take drastic action.

Travers Smith Braithwaite tax partner Alasdair Douglas, who managed the firm from 1995 to 2000 and was a partner in the early 1990s, says: 'We were one of the few firms that did not make anyone redundant.

But that was because the firm was run as a tight ship and we wanted to take the longer-term view.

Generally, it is not easy for firms to reduce costs by making staff redundant because the fixed overheads remain the same, and you can't make the numbers add up that way.'He adds: 'Many young lawyers have not been through a recession.

If they joined the profession in the mid-1990s, they have only ever experienced a boom and upward movement in salaries.

But if there is a recession, I would be surprised if salaries come down because management theory states that cuts means 100% unhappy staff whereas 25% redundancies mean that the 75% of staff who remain are happy with their package.

That is one management view.'There are other theories about how to resist the effects of recession, such as diversification or globalisation into overseas markets to balance any domestic downturn.Mr Rubens says: 'Different firms have expanded into different jurisdictions which are at different points in the economic cycle.

But the reality is rather different - in difficult times, the international network and alliances, which are obviously a costly investment, are likely to be the first to go.'Another issue is that some firms are structured in such a way that they cannot sustain that structure in a more competitive environment; firms with an assistant to partner ratio of two or three to one are likely to have a much more difficult time than those with a six-to-one ratio if the economy dips.Mr Rubens warns: 'You can get away with that structure in buoyant times, but the real issue is not what has to be done in the short term if there is downturn - it is much more one of looking at the overall way that you structure your business.

It's not about short-termism.'There is no harm in reminding people where the solution lies, he says.

Some firms which are uncompetitive, but have done well in the past few years because of the buoyant market, will be the first to suffer when a downturn arrives to weed out the weakest firms.

The solution, he says, is to have an overall structure to match the clients' expectations - but firms do not always recognise that.Mr Rubens adds: 'The strategy is to be focused on clear market position - it is sustainable competitiveness that is the bedrock.

You may have to adjust it in a downturn, but there has to be a sound underlying business model.

It is a longer-term strategic position and not a shorter-term operational perception.'In monetary terms, the question to ask is: does the firm have the retained profits to enable it to absorb a downturn? By definition, the most competitive firms will have those profits because they have an inherent competitiveness.

Those firms have also been so busy during the boom that even in a downturn they will succeed in winning more business because they are already leaner businesses themselves.And the experience of going through and surviving a number of downturns may be the best management training and practice.

In 1992, the year after the recession bit hard, national firm Eversheds merged in the UK, dislodging the then Linklaters & Paines as the second largest law firm in the country.Eversheds chairman Keith James has a slightly more sanguine view about any possible recession in 2001.

He says: 'There is a certain levelling off of profitability generally in the commercial sector, but from past experience, if there is a downturn, you have to look to the management of any organisation.'Many consider a more broadly based practice as better-placed to weather any economic storm, compared with a deal-driven practice, which is seen as linked to a bull market.According to Mr James, 'the most important lesson is tight management control.

The importance of management in law firms is much more of a factor now compared with ten years ago, or even with the 1980s or mid-70s, the last times that there were downturns.'Most firms are robust and strong, in financial and management terms.

And looking at the current recruitment demand for lawyers, there is a pretty buoyant economy.'Linda Tsang is a freelance journalist