It’s been another tough year for law firms as demand for legal services continues to wane. The instinct to cut costs and wait out the storm remains strong, but for many firms there is precious little room to maneuver.

Instead of retracting, start thinking about how you are going to position yourself for 2011.

Here are three questions you should ask to start that analysis:

1) Where are the opportunities? Understand what is going on in your market and identify where the highest demand for work will be over the next 12 to 36 months.

2) What are your firm’s strengths? Look at your skill set. Where are your firm’s sweet spots and how can you leverage them for more business?

3) Where is the overlay between what your firm does well and where the needs are?

With this simple analysis, you can begin the discussion about the types of investments you need to make to better align your strengths with market needs.

There is no such thing as shrinking your way to growth, so it is time to start planning for what you plan to do in 2011 to meet your goals.