Weathering the storm

At the time of writing this article (mid-May 2020), I was supposed to be preparing to give the closing keynote at the Law Management Section annual conference in London. COVID-19 put paid to that. As Scottish poet Robert Burns reminds us in his poem To a Mouse, “the best-laid plans o’ mice and men gang aft agley”!

In lieu of my presentation, this article now looks at some of the challenges that lie ahead for law firm leaders, and outlines what strategies will enable firms to bounce back. It may be a bumpy ride!

The impact of coronavirus on the legal sector

COVID-19 came out of the blue. Like all businesses, law firms were hit. As of mid-May, many appear to have weathered the storm reasonably well. Like all good skippers on stormy seas, the first priority for law firm leaders was to check on the health and safety of “crew and passengers” while in lockdown. While many have understandably experienced anxiety and stress – financial and emotional – many positives have emerged, including:

• improved communication and camaraderie between colleagues
• increased take-up and acceptance of technology
• teams working successfully from home
• improved work-life balance: less commuting, more family time
• new skills being learnt as a result of redeployment
• teams being more open to change
• opportunities for managers to speed up the introduction and implementation of operational initiatives.

The challenge for leaders now is to focus on the health of their business.

Of immediate concern for many firms is business continuity and solvency. While many firms’ cashflow and receipts appear to be in good shape, some bolstered by government subsidies, there are grave concerns about what cashflow will be like in two to three months’ time, as the world braces for another storm: the impact of a global recession. As the Law Society Gazette reported at the end of April, thousands of high street and sole practitioner firms could shut within six months as a result of cashflow pressures. Similar concerns have been expressed in my neck of the woods, in Australia and New Zealand.

On a positive note, while the global economic outlook is bleak, the legal services sector can take some comfort from the fact that it has historically been able to absorb recessions better than most other sectors of the economy, according to McKinsey & Company’s May 2020 report, COVID-19: Implications for law firms.

How you can help your business survive the crisis

Given the diversity of the legal services sector, there is no one-size-fits-all solution. However, there are some common themes.

Make your people your priority

Your people will be looking to their leaders for certainty and reassurance about the firm’s future, and their own. Listen to your people to better understand their concerns about and perceptions of the future, and factor them into your decision-making. Be empathetic and allow for employee flexibility. Instead of laying people off, try to redeploy them by getting them involved in client research, business development, learning to use new technologies, or pro bono community activities.

Reassess and simplify your strategy

The chances are that much of your strategic plan will be redundant as a consequence of COVID-19. For many firms, this is an opportunity to start afresh with a blank canvas and permanently adopt new working practices – many of which, pre-COVID-19, might have been resisted, but which now have become accepted and even welcomed.

Simplify the process by focusing on achieving some important short- to medium-term goals, and involve all your people in setting and implementing these. Ask them these three questions:

• What do we need to do as an organisation to survive and thrive?
• What do we need to keep, let go of, add to, or change?
• How can we better serve our clients?

Show your clients you really care

Whether your clients are businesses, institutions or families, it is vital that you check in to see how they are coping. Be human and empathetic. Don’t waste their time with spiel. Just listen. Be ready to help them in any way you can, even if it doesn’t directly result in work. Look out for any areas where they may be exposed and might benefit from your intervention – for instance, are their affairs in order, and have they made a will or a lasting power of attorney? Can you support them through introductions to other people in your network – clients, referrers or simply members of your community?

Manage the cash

Liquidity and solvency are an issue for many firms. Cash is king. Financial managers will be revising budgets and will have a keen eye on projected income, while looking to cut unnecessary overheads, reduce office occupancy costs, and reduce / delay partner drawings and bonuses. Firms may feel pressure to discount their rates, but should resist the temptation, and instead look to more imaginative ways of pricing and setting terms, such as fixed fees, flexible payment, or offering credit or finance via a third party. Clients will be looking for budgetary certainty and flexibility, so these options are likely to be welcomed.

Build new capabilities

This is a perfect time for firms to innovate in areas such as technology, service improvement, online learning, leadership and business skills development, pricing protocols, and matter management. If you have staff who are not working to capacity, redeploy them to projects aimed at strengthening your firm’s core capabilities. Be prepared to shake up your existing structure and create new operational roles and responsibilities. Don’t underestimate what your people are capable of. How many of your team were video-conferencing just three months ago?

Lead from the front

For many leaders, this is a defining moment. What you do now will be remembered long into the future. When making decisions:

• don’t be rushed into hasty choices
• keep an eye on the far horizon, not just the short term
• ensure that your firm’s work remains meaningful to the team and relevant to the market
• be guided by the set of principles you and your team live by
• be open to change and embrace the cultural shift
• resist the temptation to revert back to your old ways of doing things
• have the courage to push boundaries.

This is a time for optimism rather than negativity. While COVID-19 may have exposed some firms, for many others, it is an opportunity to refresh, refocus, and reimagine the future. By providing clarity at this uncertain time, you will give your people renewed confidence in, and commitment to, your firm.

At times like this, I am reminded of the inspiring W. Mitchell, who suffered two life-changing accidents – a motorbike accident leading to burns to 65% of his body, and a plane crash, leaving him a paraplegic – and who famously said: “It’s not what happens to you; it’s what you do about it.”