“The signals from the economy are uncertain. Every day, one looks at the economic news and the forecasting that’s being done by the Reserve Bank and by economists. We listen to bank economists try and gauge where the market is going, and we know that certain parts of the market are going to be challenged in the next six to 12 months and have been challenged over the last six to 12 months. But there is uncertainty, and you don’t know how long this is going to last and what part of the market is going to be particularly challenged,” he explained.

“Oddly enough, mergers and acquisitions work is still continuing to hold up, although not at the great intensity that we saw maybe 18 months ago. And the property market is shifting and changing. We see great unmet demand in the property market, and yet an apparent inability because of supply chain issues to deliver to market. So, there are a whole bunch of external influences that are at play, and we have to try and respond to them with care because you can go too hard in particular directions to address issues that may not emerge.”

Colin Biggers & Paisley, said Mr Crennan, is “built to deal with the counter cycle” – meaning, sometimes parts of the firms will peak while others slow.

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“In times when economic times get tougher, there are parts of the firm that rise. So, insurance is always a constant, but tends to tick up a bit in tougher times. Property and transactional stuff will peak in good times and slow down a bit in poorer times. Insolvency and litigation, once again, rise in difficult times. In construction, in my own field, whenever there’s a change in the supply chain or the economic conditions, that causes problems and that generates work for us,” he added.

“So, our response to the economic uncertainty we’re seeing is a bit of resource levelling. We try to shift resources around to where they’re best used to maintain utilisation, which is a key driver of profitability for law firms. But we find ourselves pretty well resourced at the moment. It’s just a matter of picking the right place to expand a little, not too much.”

In terms of the comparison between the current climate and previous downturns or other periods of uncertainty in the last couple of decades, Mr Crennan hasn’t seen market conditions like this for over 30 years.

“1990 is the last recession I worked through that the firm lived through and endured through that because of its countercyclical nature. We, of course, went through the pandemic, and we were confronted with enormous uncertainty, and we had to use scenario planning to try and address that,” he added.

“But this time, you get the sense that the economy is on some kind of tipping point, and it could go really sour, or it could emerge from this current time of constraint to a great deal of vigour. When you’re faced with that level of uncertainty, you do need to try and plan for different scenarios. That’s what we try to do.”

In terms of how managing partners can prepare for the future and lead accordingly, Mr Crennan drew a distinction between managing and leading through turbulent times.

“Managing is all about keeping a very close eye on resourcing, making sure you’ve got the right people, making sure you’ve got the right mix of investment and development of your people. So, you got to continue development. You always must keep developing people. That’s our stock in trade.

“In terms of leadership, I find that the themes of leadership are not terribly different whether you’re in difficult times or in good times. They are the constants of having purpose, letting people know what you have as a shared purpose, what your vision is, and communicating that again and again and finding evidence for the way you are actually executing that vision, what you’re trying to achieve,” he explained.

“I find when people are along for the ride, along with the journey, their effort rises. When they’re working together, when they have a shared purpose, I think that’s the key element of leadership. I think caring for people is really, really important. Listening, speaking to them as often as possible, finding out what’s impacting them. These are the main components of, I think, good leadership.”

Looking ahead, Mr Crennan emphasised that being a good manager and leader both involves having a strong purpose and developing those under you.

“I’m a great believer in purpose. A shared purpose, a vision, [and] shared values. Having those as your touchstone. Collectively developing strategy. I think I heard somewhere or read somewhere about the democratisation of strategy that’s particularly important in law firms. A fully democratised strategy emerges not only from the partners but from the fee-earner cohort and from the non-fee-earner cohort. Developing that strategy that you share and then executing it and communicating it. I think the touchstones of leadership in law firms,” he concluded.

“I’ve also learned a lot more over six years of being a managing partner about how powerful coaching is. And that’s what excites me. Dealing with people, being able to sit down with somebody over four sessions, working out what their true goals are and working out how they are going to achieve their goals is the best thing in the job.”

The transcript of this podcast episode was slightly edited for publishing purposes. To listen to the full conversation with Nick Crennan, click below: