Edge International

20 insights you need to run a law firm in the 2020s

Chris Bull

In 2021, there can be no doubt that we are living in a digital – and data – age. For most businesses, including most law firms, there is catching-up to do.  Law firms remain ‘data rich but insight poor’ and that will impede efforts to create the agile, insight-driven organisation you need to compete in the 2020s.  This short article offers a simple, introductory step to begin addressing the insight gap.

I encourage firms to adopt a more rigorous approach to harnessing the extensive data they have and creating insights that then support faster, better informed and actionable business decisions.  Law firms do face some challenges in doing this.  Some of them derive from a conventional approach to running the partnership model that has dictated reporting, reward, remuneration and performance management structures. The emphasis has often been on reporting and recording that supports profit allocation rather than profit generation. ‘Getting on with the job’, ‘we have always done it this way’ and ‘gut instinct’ can be valued more than making decisions based on data, empirical insight or trend analysis.

I have developed and used a tailored model for law firm leaders to improve and accelerate the process of converting data into measurable business impact – in the form of improved performance.  This approach synthesises best practices in business intelligence, analytics and decision-making. The Information / Insight / Impact (i3) model has five distinct stages: Information – Intelligence – Insight – Intent – Impact. It is often deployed initially to introduce more structure and rigor to core commercial decisions around fees, pricing, resourcing and profitability at firm, practice, team, client and matter level, but the model is designed to be applied to every type of business decision at every level from team through to the whole firm.

The goal is to take the entire firm to a position where it is genuinely and enthusiastically ‘insights-driven’; where every partner and manager in the firm is constantly pushing for deeper, better and more timely knowledge about team, practice, sector, firm and individual performance and acting on that insight; and where your people demand insights before taking big management decisions about new clients, pricing, hires, resourcing and expect valuable intelligence ‘on tap’, available in real-time and up-to-date.

Generating genuine insights that provide decision-makers with the input they need requires human as well as technology effort.  The advent of Analyst, Business Intelligence, Data Scientist and Pricing Analyst roles in large law firms has been a big trend over the last few years.  I expect that this marks the beginning of a new specialism most modern law firms will need on-board. I have spoken to a number of legal recruiters over the last few years who say this skillset is one of their biggest growth areas. Firm management teams need to understand better how to recruit and deploy these analysts and what the optimum blend of technology and people is.

Before you can begin to make those changes, you will want to be clear about what insight is. There are a few criteria that help distinguish insight from information or intelligence, mainly related to its value; its ability to be used directly to inform rapid business decision-making. Insight is:

Focused – insight is not generated by simply pushing out more reporting and information into the organisation.  Analysts need to understand what the user / decision-maker is trying to achieve and insight delivered should be focused tightly on that.

Usable and Actionable – insights should be influential.  Delivered in the right format, at the right time for the user and clearly explained, with the necessary supporting information for decisions to be made and action taken.  That creates a crucial distinction compared to conventional information reporting.

The result of systematic analysis – by human resources, technology or, commonly today, a combination of the two.

Extensive – typically multi-layered, pulling on multiple data sources and based on a series of ‘what’ questions, to get closer to the root cause.

Predictive – simply reporting a historic metric does not create insight.  Utilising that intelligence to suggest, anticipate or model a future outcome or trend does. An indication of what might happen next is more likely to trigger action from decision-makers.

Analysts and others involved in designing and then delivering insights to managers will often use established business tools, many of them, like Root Cause Analysis and Five Whys, closely connected with Agile methodologies,  The purpose of using these methods is to generate deeper insights that are not immediately obvious when you are presented with a static piece of information or intelligence; the insight is created by digging down, asking more questions, challenging the superficial or initial reading and synthesising multiple strands of intelligence. That mining for nuggets of insight seldom happens in an environment which relies on standard-form financial reports being served up at the same time each month to the same over-busy individuals, without any premium being placed on finding new revelations and inconvenient facts.

How to get started on delivering more insights in your firm? I recommend a very simple start-point which involves assessing how well your firm’s decision-makers – your partners and managers in the first instance – are being served with a stream of valuable insights, ‘oven-ready’ to inform their decisions.  I have refined a list of Business Essential Insights down to 20 questions that every firm should be able to answer at any time.  This list is, needless to say, not a comprehensive directory of every important dimension of performance and measurement.  But it does represent an attempt to pose the fundamental questions that any business leader and decision-maker would be expected to ask and have an answer to at his/her fingertips.  There is a further list of ‘Business Next Steps’ (the equivalent of a ‘deeper cuts’ playlist) which I will save for another day, as 20 is more than enough to start with?

Consider each of the dimensions below and score your firm* against each one using the following ratings (each question scores out of 5, with a highest possible total of 100):

  • I don’t have / don’t know if I have this information – 0
  • We can produce this information but it would require a special report to be designed – 1
  • This information is available at firm level as part of our annual financial reporting – 2
  • This information is available at firm and department level as part of our firmwide regular monthly reporting – 3
  • This information is widely available on-demand with analysis / insight at firm, department and team level – 4
  • This information is widely available on-demand with analysis / insight down to team, client and matter level – 5

*Don’t worry if you need to ask someone else in the firm – that is quite normal. But it does underline the fact that law firms have not traditionally put enough emphasis on the core business processes that distinguish insight-driven organisations.

Business Essential Insights
1.    What we sellTurnover by Product/Service Line. By practice group is fine as a way of consolidating this information but it is not enough: every business has to know what it sells – which for law firms means the services / products / worktypes – ideally by volume as well as value.
2.    What we generateProfit margin – Gross margin after direct costs and a realistic notional Equity Partner salary/remuneration (NEPS)

Running profitability for products/services, practice group, team, office etc. is essential – ‘sales are vanity, profits sanity’

3.    What we makeNet margin – Net margin after all costs for team, practice group and ideally for clients and large matters too (latter should include Cost of Sales, include direct sales/marketing)
4.    What clients’ value and like / dislikeWhat aspects of your service do clients regard as most valuable and where is your service positively differentiated from competitors.  You will need to collate and analyse client feedback using a tool. Try to get under the skin of what clients dislike, find frustrating and introduce delay or distraction into their lives
5.    Which features of our service clients use most oftenWhich tools, documents, communication and collaboration media, software and value-added services do clients use, and not use: track using your information systems as well as client feedback
6.    How busy people areTotal Time per individual / team / Group average – include all time working (should be the individual’s total time contribution to firm, not ‘chargeable only’)
7.    How productive people areChargeable (plus any designated ‘investment’ categories – you may decide that some essential activities which you can’t charge for are nevertheless value-adding for clients and should not be reduced) time as % of standard working hours
8.    How much in the sales pipelineSales pipeline analysis, highlighting target clients, work types and sectors.  Tracked regularly, using volumes and estimated value
9.    What is capital ‘lock-up’Categorise between healthy/necessary working capital levels and delayed / excess ‘lock-up’. Report aged debt and work-in-progress
10. How are we leaking revenue & profit?For major matters, track ‘leakage’ from total potential revenue & profit, broken down by time write-off, invoice discounting, bad debts, fixed fee/AFA over-run [latter is critical] – you need to understand how & where you lose value
11. What is our client acquisition rate?How many new clients are we creating (monthly / quarterly / annually); usually quoted as a % of existing live clients
12. Which clients are loyal & growing?Track major client fee growth, cross-buying of services from additional practice areas (a good indicator of profitable client accounts).  Track fastest growing clients ‘bubbling up’
13. What is our client churn rate?How many clients do we lose (monthly / quarterly / annually), often quoted as a % of existing live clients – NB this is easiest to measure in retainer / subscription or recurring work practices.  ‘Returning clients within x years’ may work better in less regular practices
14. How does new work come in?Introductions (internal) – utilise ‘fantasy sports’ points for ‘assists’ as well as ‘goals’.  Remember to adjust periodically for actual fee outcomes or profitability
15. Where does new work come from?Referrals and channels (external) identified for all major new opportunities.  Do not allow tracking internal / partner originations to overshadow this activity; you should be doing both
16. What is our real achieved rate?Track actual achieved rate (after all write-offs, discounts etc.) for individuals and report against rate card
17. How we price workTotal turnover (and profit) split by pricing mechanism – your firm (and practice etc.) should know exactly how much of your work is on standard hourly rates, discounted rates, fixed fee, capped fee & various sub-divisions of AFA
18. What resource capacity we haveRolling Forward View (3 months in detail, 12 month+ in outline) of lawyer resource based on current workload, matter plans, sales pipeline, vacation plans etc.
19. Are staff loyal & satisfied?Attrition/Turnover rates – Percentage of staff leaving per annum; split between various ‘good leaver’/’bad leaver’ categories. Conduct regular staff pulse surveys or similar.  Track how well staff felt the firm dealt with issues the survey identified
20. Where are people spending non-value added time?Use Total Time recording (where all time is recorded & categorized, including meaningful non-chargeable codes) to identify major admin burdens, downtime, duplications etc. and track impact of process improvement

These 20 Business Essential indicators could be delivered as flat reports or tables of information irregularly but, as my scoring mechanism suggests, that is not really meeting the need of providing decision support input to all of the right people at the right time. Law firms have not always put the emphasis on some of these ‘business 101’ basics that other businesses have; number one above underlines that point – how many leaders amongst your own clients are not able to immediately provide a breakdown of their turnover by product or service, citing their top selling and most profitable lines?

Oh – yes, the scores.  If you scored above 75 congratulations; you are providing much of the essential business information your decision-makers need and are addressing the triple issues of accessibility (making it easy for a wide spectrum of people to access), timeliness (providing up-to-date input for decisions whenever they need to be made, rather than on a rigid monthly or annual cycle) and insight (providing more than just flat reports).  If you scored 51-75; there is a way to go yet in terms of meeting those criteria but you have built a solid base of information on which you can build.  Below 50; I would advise you to make the information-insight-impact process a priority for 2021 and demand more of the people who are responsible for managing your information and reporting environment.  Please don’t hesitate to drop me a line with any questions or comments  you have about the Business Essential Insights, your score and how to address any gaps you have found at chris@edge-international.com .

The key lesson from the i3 model is always to begin with the outcome you are looking for – what business performance impact or improvements are you looking for – and work backwards: asking yourself what decisions (‘intent’) need to be made, how often and by who. And then what insights are required to inform those decisions.

The Law Firm Technology Landscape Post-Covid: Part Three

Chris Bull and Peter Owen

In the space of just a few months in 2020 law firms, along with many other organisations, have adapted to a very different way of collaborating and communicating.  With their people scattered across a constellation of remote working locations and with a vacuum created by the impossibility of in-person meetings, new ways of engaging have emerged and become commonplace.   Video has emerged from its relatively minor role pre-COVID to become a critical application.  In this third and final part of our technology focused series, co-authored with our expert technology partners at Lights-On Consulting,  we take this dramatic shift in the way lawyers collaborate and communicate as our start-point for a look at the many areas of law firm operations which could be transformed by the response to COVID.

Edge International author and Principal Chris Bull consults with legal businesses in the space between strategy, transformational change and operational efficiency.  Deploying and leveraging technology is at the heart of this practice and Chris is one of the three co-founders of The Intuity Alliance, a group specifically focused on cutting-edge advice legal industry IT, innovation and LegalTech.  Fellow founder Peter Owen leads Lights-On Consulting, one of the most experienced legal IT advisory firms in the market.  Lights-On have produced an extensive and impressive multi-part overview of IT ‘considerations for the post-lockdown law firm’ and Peter and our friends at Lights-On have worked with Chris to summarise in these EIC articles the biggest changes firms will face in the post-COVID world and recommend how firm leadership should be planning and acting to address the opportunities and challenges.

How law firms work has changed forever in areas well beyond agile and remote working

Our previous article in this series took a closer look at how the COVID crisis has provided the trigger for dramatic and, we believe, permanent changes in the fundamentals of how lawyers work.  In particular, that transformation is characterised by, first, a rebalancing in the location of work, with hybrid home and office working becoming an established part of the standard firm model.  And, secondly, by the need for both internal and client-facing processes that rely on paper and face-to-face interaction to be digitised.

Beyond these core questions of how legal work is done, the use of technology in a whole spectrum of other areas of the firm has been given a jolt by the COVID crisis.  This third part of the series takes a look at some of those other changes and opportunities, beginning with the most high profile and ‘in your face’ (very literally) implication of working through COVID; the emergence of collaboration and video communication platforms as one of our most business-critical tools.

Has video killed the radio (voice) star?

Back in early March 2020, maybe a few of us had used a video collaboration app called Zoom a couple of times and it had a bit of buzz around it; not least because there was a free-to-use restricted time version available.  Others were advocates of similar apps and they were used, from time-to-time, for multi-user calls.  Microsoft Teams was beginning to get rolled out across law firms, though many IT departments were in ‘we have the licences but won’t be ready to roll-out until later….’ mode.  Face-to-face meetings were still standard and the phone, especially mobile, was the most common medium for short 1to1 calls.  Video conferencing was still, in many places, something you only did in a conference room with multiple others.  In thousands of firms around the world each desk had a fixed line phone handset dedicated to the person whose desk that was.

Folks – that was just 6 months ago but it is a world already receding into memory and that you will never see again (warning: if this is, in fact, the world you now find yourself returning to over the coming months get yourself the hell out of there: you are living in some period drama re-enactment of old time lawyering!).

We have just witnessed an unforeseen and sudden hyperdrive leap forward into a very different communications culture where a big premium is put, in the absence of meeting in-person, on seeing the people you’re speaking to and the infrastructure to make that easy and attractive is widely available.  As firms return to some form of office working and settle into a new way of working, this has big implications for tech and operational support.  We’ve broken down some of those implications here:

Room video conferencing (VC) – on return to the office people will naturally expect to use your meeting room-based VC seamlessly combined with single user “Desktop VC”, probably connecting up with many people working at home or clients in their own workplace. Is what you have today compatible and do your user guides include how to do this? You need to test the various combination of set-ups and should produce new guidelines now for in-office and remote users on how to operate and manage hybrid VC set-ups.

Desktop video – with maybe only 25-30% of the workforce in the office, desktop VC is likely to be in permanently high demand for internal and external use. Usage in office can have some big differences compared to home VC.  At home, people may have used the laptop’s own microphones, speakers and built in web cam from a relatively private room, but that may not be appropriate for the office due to nuisance noise or confidentiality issues. Further complications come if the office set-up differs – for example the office-based laptop is docked and the lid closed.  Screen-top webcams and noise cancelling headsets are likely to be required for successful desktop VC in the office and yet may be in short supply globally.

In addition to equipment and set-up, the swapping from one configuration to another, as staff switch from home to work, may be an issue and will have to be tested and training guides produced. If short supply issues mean you are forced into a mixed technology set-up, this could quickly become complicated and hard to support.  It is not easy to get comms working seamlessly in this scenario, so firms should be chasing down equipment availability with suppliers now.

Office internet infrastructure from an infrastructure point of view, the set-up of VC and internet remote access is fundamentally different at home than in the office. Ironically, if you add up all your staff’s home broadband internet bandwidth it is likely to be way in excess of what you have in your own buildings. New, extensive levels of VC use in the office may cripple your internet connection if you’re not careful.  Firms are advised to “do the math” and seek options, costs and lead times now to be ready for heightened use of VC in the workplace making much greater demands on internet connectivity.

Some firms only provide meeting room WiFi . A combination of social distancing and the need to use desktop VC may place increased pressure on your WiFi and extend high performance WiFi throughout the office. In many buildings, the WiFi network is now taking over as the primary network with the latest equipment providing gigabit throughput and support for IP-voice and video. Senior management should know what its infrastructure is capable of. To put it simply, your office infrastructure may be a US freeway with lots of lanes or it may be a single-track English country track that is just about to contend with summer holiday traffic levels – it’s best to know which one you are in advance!

Product choice – there is no doubt that the pressure will be on for a longer-term investment in the strategic collaboration tools and video platforms that are enabling this cultural phenomenon.  There are considerable differences between the available products. Some are obvious: take the limit on numbers of simultaneous video streams – Microsoft Teams belatedly managed to roll-out the increase from four to nine people mid-lockdown.   But other, equally critical but less visible differences exist. Careful consideration is necessary to choose your future product portfolio. Some areas of consideration are:

  • Use-Case – it should go without staying, but what you want to use the tools for will govern what tools you select. Products differ widely with some being strong for webinars and others better for file collaboration and 1:1 VCs. There is a perception that all tools do all those tasks but, in reality, each of them has some clear strengths and, perhaps more importantly, real weaknesses; so know what you want to use it for
  • Integrations and APIs – what you want to integrate with the collaboration product will affect the choice of product; the tight integration of Microsoft Teams with the Office suite is an obvious example, but it is sensible to explore the full range of integration on offer
  • Cost – be wary about usage costs. They can rocket depending on various use-cases and licensing methods. These vary enormously between products and can only become obvious once you are up and running and incurring monthly usage bills with the product rolled out across your firm
  • Telephony – some products lean towards voice (and therefore could potentially replace your previous telephony system) and others towards PC-based collaboration. Most firms want a product that can provide a combination. This is probably the time to abandon your attachment to physical phone systems and handsets, if you’re still there, and move to soft phones, headsets and integration with existing collaboration software and with mobile devices.  But this will depend on your existing phone investment, contracts and budgets
  • Skills – managing these technologies on a big video call whilst also trying to focus on a message and delivery can be hard. New “broadcaster” skills will be required for presenters and hosts, but also for admin support in complex meetings who will handle the more technical elements of the session (such as Q&A, raising hands, note taking). Some lawyers already struggle with PowerPoint presentations so combining this with broadcast technology may need a little more support to be effective
  • Reputation – don’t lose sight of public and client perception; some of your clients may block or actively mandate certain products. certain products. It may pay dividends to check with your larger clients before making a big selection decision.  However, don’t be swayed by press or advertising hype; the whole area of working from home, video comms and collaboration is subject to all sorts of rumour and myth right now and your decisions need to be founded in evidence and your own firm’s needs, not some stranger’s opinion
  • Hidden technology – an example of this is mobile versions of some collaboration products using the phone’s GPS to be able to track location by default. Your IT team need to be very alert to these settings and features, many of which may also have privacy and data law (e.g. Europe’s GDPR rules) implications
  • Policy and protocol – VC tools can come with a raft of other collaboration functions such as chat, presence, file exchange etc. What governance is there around the use of them and is it fit for prolonged use embedded in the working culture? Law firms have worked hard to control documents and enforce governance around files and document management systems (DMS), yet some firms may have paid little attention to locking down features in these newer tools or developing policies in the rush to get lawyers on-line remotely.

Not necessarily a ‘top 5’ technology investment decision in the pre-COVID world your firms choice of collaboration product(s) now looks like a critical one, which could have a major impact on your future way of working and may even become the keystone technology in your client service delivery armoury.

 The next digital, agile model will change many other parts of your organisation

Basically, we are into the realm of predictions and prophecy here – albeit, we like to think, we only do informed predictions.  We have tended to focus most of our analysis so far, understandably, on the core working use of tech by lawyers in the post-COVID world.  Looking beyond that to the way in which other parts of the law firm environment will change, we expect to see a host of other parts of the firm evolve as a direct result of the stimulus of the COVID period:

An overdue renaissance of training effectiveness – caught between over-busy, chargeable hour fixated lawyers, reducing attention spans and uninspiring training delivery models, imparting new skills and knowledge to experienced people in law firms has been in a rut for years.  The partial attempts to embrace online, e-learning and ‘just-in-time’ methods haven’t made enough of a dent in that challenge.  How do we continue to train and develop our people, not just in IT tools, but in legal practice?  Technology can be an enabler to achieve a new dynamic model for training, exploiting the collaboration and comms technologies we have all just installed and rapidly got used to; video, remote collaboration, machine learning and smart knowledge management tools.  The opportunity to reinvent legal training is there as it has never been before, but it will be easy for firms to overlook it amidst some many other priorities.

Centralised, relocated and outsourced back and middle office services – hardly a new trend, even in the relatively slow to adopt legal world.  We have seen various waves of outsourcing, lower cost location Shared Service Centres and managed service contracts over the last 10 or so years.  One truism often repeated during this period has been that the hardest part is the initial relocation of any service – IT support, accounting, knowledge management, typing – away from the lawyers/internal customers.  That’s the point at which we typically see ‘tissue rejection’ and a battle over whether the restructuring goes any further.  Once over this hump with service being provided from somewhere else for a period, process reengineering and further outsourcing have proved easier to implement.

Well, we have just been through an enforced, no-blame moment where almost all of these internal services are being provided from a remote, non-office location and face-to-face contact between lawyers and support, including secretarial, has almost disappeared.  With so many firms looking to reap the benefit of a more agile model by reducing their real estate footprint and responding to recessionary conditions with restructuring, the stars do appear to be aligned for another, more pervasive wave of centralisation and outsourcing of all kinds of support and administration.

Remote project management – both volumes of projects and demand for project resource are likely to be high over the next year.  Managing the project portfolio and inter-related strategic programmes of work (such as the migration to a hybrid / agile model) will be critical.  Doing this remotely can be difficult and project managers with limited experience may struggle. You will need to find different ways to deliver projects, train people, apply control and maintain effective project team communication.  Some projects just need people onsite and working in close proximity and the project portfolio will need to be re-shuffled if this remains impossible for an extended period.

Office 365 – firms already using this in anger and not just as a licensing approach have benefited from the flexibility it affords and licensing will mean that products such as Teams will make Microsoft 365 even more attractive. Office 365 migration is a complex project and not one that should be undertaken without experienced input.  There is a danger, in the rush to implement, that too many firms will underestimate the complexity of this environment and the depth of understanding and careful planning required.  Leaders should pay attention to Office 365 projects and not assume they will be quick, easy or painless to deliver.

Business Continuity Planning (BCP) gets real – for many firms COVID has been the first real-life test of at least part of their BCP and, for a few, it may have forced the creation of the first real draft! COVID has demonstrated the key role that IT plays in keeping a business moving and the importance of solid yet flexible infrastructure during unplanned disruption.  Whether this involves simply formalising the adopted plan, dry-run testing it with newly experienced eyes or identifying and implementing new infrastructure, it is important you set time aside to do this now and involve the owners and leaders of the firm. Now is the time that owners will be most receptive to accepting their accountability and involvement in what can sometimes be seen as a support department’s domain.

Sustainability and environment – with restrictions imposed by governments around the world and an understandable reluctance to undertake any travel unless absolutely necessary, both international and national travel for face-to-face meetings has been replaced by video conferencing tools. If there has ever been a time for a firm to embrace sustainability-enhancing technology and low carbon ways of working, it is now.  This will require drive from the top and governance around implementation and management in order for it to embed fully; only the best-led and most determined firms will truly achieve this and head towards what should be the net carbon neutral goal.

Admin processes – how well did your admin processes stand up to the tests of home working? Many HR, Admin and Finance processes may have suffered from lack of electronic based workflow.  Lockdown will have revealed the effectiveness of your digital workflows better than any review or debate has done.  Addressing digitisation of those processes that didn’t work seamlessly, including a focus on digitally handling approvals and notifications, will be critical to meet the standards of the 2020s agile law firm.

Virtual introductions – new client relationships may begin virtually far more often in the future. New techniques and skills are going to be required to be able to put the best virtual foot forward: reading the room and eye contact don’t work well on VC so do your staff need training on ‘effective Video conferencing’ for engaging new business, closing deals, pushing projects along?

Recruitment and onboarding of new staff – during lockdown, more law firms have interviewed candidates by video. This was already being used by large organisations before COVID and, as in so many other areas, we anticipate a dramatic acceleration of take-up now.  It can be a highly effective and efficient process, which also tests applicants’ ability to work in a digital environment.  Irrespective of changes to social distancing guidelines, video interviews are an approach worth exploring to help streamline recruitment processes.  Your initial engagement with potential recruits will also demonstrate the extent to which your firm has successfully balanced the efficient / digital and human / personal.

 Conclusion: The Agile Law Firm

This three-part series co-authored with Peter Owen from Lights-On Consulting has taken a look at what next for law firms from the perspective of technology change.

As anyone who is used to looking at the impact of technology on legal practice will be well aware, the implications extend far beyond the boundaries of ‘IT’ to touch every aspect of and every person in the firm.  Responsibilities for leveraging the competitive opportunities arising post-COVID as well as for ensuring the firm handles the multiple challenges and risks does not lie with the IT function only either.  We have produced this series at Edge International because we believe these are issues which demand immediate, Board and Partnership level attention and decision-making.

We are now focusing a lot of our time, research and insight into this emerging Agile Law Firm model and we welcome contributions, ideas and the opportunity to engage on agile strategies right across the legal marketplace.

Further Reading: the full Lights-On papers summarised in this article are available to read on the Lights-On Consulting website:

Thanks also to Lights-On consultant Christiaan Frickel for his great contributions to this piece.

The Law Firm Technology Landscape Post-Covid: Part Two

Chris Bull and Peter Owen

It is imperative now for law firms to confront and engage with the permanently changed technology environment we will operate within in the post-COVID world.  Planning and action need to start today, with opportunities to be seized and risks to be mitigated.  Part two of our three-part technology-focused series, co-authored with our expert technology partners at Lights-On Consulting, focuses on this critical business agenda and asks all law firm leaders to make it a priority for their firm.

Edge International author and Principal Chris Bull consults with legal businesses in the space between strategy, transformational change and operational efficiency.  Deploying and leveraging technology is at the heart of this practice and Chris is one of the three co-founders of The Intuity Alliance, a group specifically focused on cutting-edge advice legal industry IT, innovation and LegalTech.  Fellow founder Peter Owen leads Lights-On Consulting, one of the most experienced legal IT advisory firms in the market.  Lights-On have produced an extensive and impressive multi-part overview of IT ‘considerations for the post-lockdown law firm’ and Peter and our friends at Lights-On have worked with Chris to summarise in these EIC articles the biggest changes firms will face in the post-COVID world and recommend how firm leadership should be planning and acting to address the opportunities and challenges.

The post-COVID law firm technology universe is emerging more clearly: now is the time to plan and act

As restrictions are lifted and economies reopen, many factors come into play and affect firms that are emerging from a ‘state of emergency’ remote working model. There is a lot of talk about lessons learned – but have you actually identified and documented them?  And plenty of new opportunities for better working practices and technological improvements mentioned – but have you worked out how to capitalise and embed them for the longer term?  Meantime, alongside this big picture stuff sits a long list of IT “tidy up” tasks that have built up over the months blindsided by the need to support remote operations.

The big opportunity is digital transformation

Just as any business continuity event presents an opportunity to identify and then address areas previously overlooked or under-resourced, so will the pandemic. In the previous first part of this short series we focused some attention on acceleration of the move towards truly digital, ‘paperlite’ law firms.  That opportunity is, if anything, coming into sharper relief as the COVID-impacted period extends and as organisations initiate some partial return to offices.  Challenges are emerging and those practice areas which have only just managed in the remote working lockdown are becoming more visible.  That final push towards true digital transformation may begin, once again, to seem tantalisingly just out of reach for even tech-smart firms.  Our view is that would be a mis-reading of the position and the opportunity; if ever there was a time to seize the day and switch to an emphatically digital road map, this is it.

There remains some residual reluctance around the legal world to accept the necessity to drive out paper and embrace digital working, although that has become less common and more muted since COVID struck.  We don’t have the space to embark upon a full dissection of the pros and cons in this short piece but at the big picture level, firm leaders need to ask themselves why they would not prioritise a change that will make their operations:

  •           Cheaper
  •           Faster
  •           Greener
  •           More compliant
  •           More responsive to changing client expectations
  •           More agile & flexible
  •           Collaborative
  •           Less demanding of real estate and administrative support.

Some key components need to come together to move your firm up through the gears to speed up and secure your migration to a digital model.  Progressing each of these in tandem is not an easy job; shifting to a digital model is not just ‘going to happen’, even with the big nudge we have just had.  This is not the remit of IT alone either; it will take backing from the Board, Senior Management Team and owners of the business to achieve, together with a whole package of technology to match the ease, flexibility and portability of paper.

This isn’t an exhaustive list but those key components that need to be aligned to realise your digital transformation opportunity will include:

  1. Digital signatures – deployed internally and externally with clients wherever they can be
  2. Collaborative, accessible document management application
  3. Document and Task automation, and data integration between applications
  4. Electronic client communications and interface as the default, with clients incentivised to use digital channels to communicate with you
  5. Scanning and digital distribution of the residual inbound post that is still received (possibly centralised or outsourced)
  6. Digital Matter File as the default store of record for compliance and finance purposes
  7. Seamless internal communications and collaboration tools connecting offices, homes, mobile workers
  8. Entirely digital internal finance and administrative processes
  9. Personal IT equipment that maximises effectiveness of digital working – including laptops, mobile devices, dual / larger screens, mobile device(s), headsets, cameras
  10. Digital working and personal effectiveness skills and support

You need a post-lockdown tech clear-up: it’s not sexy but it is clever

Amnesty many firms may find that tech-savvy lawyers have found their own innovative ways of collaborating and sharing with other parties and working remotely offline. They may have even tried out the odd hack here and there, courtesy of the internet, to work around some of the governance that makes life difficult when remote. How do you discover and assess these changes or new systems and applications hiding in the shadows? What do you do about them once you have found them? What compromises have been legitimately made to get people working and what needs to be done to close the gaps? We have seen law firms giving temporary local administrator rights on laptops under the pressure of having to deliver and these loopholes will have to be closed. One option is an amnesty to IT as well as to end users to uncover what needs fixing, securing or adopting.

Security compliance – we are aware that some security questionnaires issued by law firm clients since lockdown now include questions specifically relating to the relaxation of access controls, policies and data management during the crisis. Are you confident that your current data security posture and threat landscape are appropriate for your business and existing customer contractual commitments?

Those ‘business as usual’ issues from March haven’t gone away – software company declarations made well in advance of COVID-19 still stand and some software, including a number of legal PMS applications, remains end of life or is heading there quickly. Microsoft has not extended all of its end of support dates either.  Amongst the exciting new tech enablement projects and post-COVID enhancements, there is the reality that end of life practice management systems and other backlogged maintenance activity still need attending to.  All of this awaits the CIO and their team as the firm returns to some semblance of normality and leadership needs to genuinely understand the expanded workload and revisit prioritization and resourcing.

Data sprawl – key records of decisions, advice and matter related information may now reside in a variety of sources – WhatsApp, Zoom, LinkedIn messenger, SMS, Dropbox, Box etc. It is expected that policies and procedures will have been put in place by your firm to manage this but, if not, then your firm should consider how to reconstruct the single electronic file in a clean-up that is as much a Risk & Compliance as an IT essential.

The equipment dilemma – now you are supporting two (or more) high-performance working environments

We realise that not every firm is expecting to emerge from this period with a permanent hybrid / agile working model.  But most mid and large firms we work with certainly are, as we explored in part one of this series.  That will mean a workforce operating flexibly – and often unpredictably – between office, home and mobile locations.  The comment du jour we hear right now, especially from senior lawyers, is “I think 2, maybe 3, days a week working at home would be perfect for me”.  Well, that means that a lot of your busiest people are looking to split their time pretty much equally between office and home. That demands that they can work really well, and connect seamlessly with colleagues and clients, from both locations.

Equipment – If your staff took equipment home at the start of lockdown, procedures for either replacement (to have home and office working possible without further equipment moves) or recovery of the equipment back to the office will be required. Some firms that have deep enough pockets are taking the decision to duplicate equipment and maintain a full home working set-up in addition to standard office set-up to accommodate home workers and further waves of lockdown or future pandemics.  Each firm will need to gauge their attitude and financial capacity to take this route.

Many firms will manage the shift in part by allowing some more extensive use of personal devices in the home and mobile settings. Is your patching and mobile device management system capable of supporting this potential surge in ‘bring your own device’ (BYOD)’ and mobile device deployment? Firms need to check now. For firms that have not already invested, there may be a business case now for mobile device management (‘MDM’) systems and tools to monitor performance, security and patching for mobiles (and all devices).

Desktop or Laptop? ‘Thin’ or ‘fat’ client? – when returning to work at least part of the time back in the office, your people need a user experience that is as consistent as possible, without difficult and confusing differences in how to operate their tech equipment and use applications when they change location. There can be some big gaps between the in-office, desktop experience and laptop, which can generate inefficiencies and errors (and sometimes requiring the firm to supply and maintain two different devices).   It may be time to evaluate the business case for laptops firmwide for all staff rather than just fee-earners (which is often the default approach) and this may call a halt to any still planned desktop roll-out strategy.

Conclusion: The Agile Law Firm

We have taken technology as our start-point for these articles co-authored with Lights-On Consulting on the post-COVID law firm but as we followed the implications of this most unusual of years, we have presented an inventory of changes to the elemental law firm business model.

We now expect to see permanent and lasting change in how and where (and, almost certainly, when) lawyers work as a result of the events of 2020.  An unexpected shock to the system has, finally, triggered the era of the Agile Law Firm. Many in the legal world will have ambivalent feelings about these changes, which tend towards the much-faster evolution of a digital, remote, fast-moving and constantly changing environment.  Some will feel more unambiguously negative; there are, indeed, many difficult and probably painful consequences of this acceleration and we will take a closer look at these serious challenges and downsides as they come into focus over coming months.

For now, we are now focusing a lot of our time, research and insight on how to plan and implement this emerging Agile Law Firm model and we welcome contributions, ideas and the opportunity to engage on agile strategies right across the legal marketplace.  In our third and final part of the series we will look in more detail at how technology can help to transform many other aspects of law firm operations, starting with collaboration and communication.

Further Reading: the full Lights-On papers summarised in this article are available to read on the Lights-On Consulting website:

Thanks also to Lights-On consultant Christiaan Frickel for his great contributions to this piece.

The Law Firm Technology Landscape Post-lockdown: Part One

Chris Bull and Peter Owen

Take a step back and assess the transforming role of technology in your firm with Edge International and our expert technology partners at Lights-On Consulting.

IT has borne a substantial part of the burden of getting law firms through the constant and rapid sequence of challenges faced since the Covid-19 pandemic took hold. Along the way, impressive feats of reinvention have taken place in how (and where, and when) law firms work. Most participants in and observers of these changes, and certainly the team at Edge International, believe much of this reinvention is here to stay. The legal industry has had a catalytic shock to its system which has generated the amount of change we might normally expect to take years.

Because that explosion of activity, with technology at its core, has been so rapid, responsive and – at least initially – short-term focused, there has been little time to step back and examine where we now are, or to map out what should happen next. Such a fast-track sequence of big decisions and actions inevitably leave gaps, unresolved issues, training and communication shortfalls, and risks.

Now is the time, we believe, when all firms must begin to review where they have landed on the technology roadmap and what to do next to secure and the positive outcomes and deal with those open risks and issues.

Edge International Principal Chris Bull consults with legal businesses in the space between strategy, transformational change, and operational efficiency. Deploying and leveraging technology is at the heart of this practice, leading to Chris co-founding The Intuity Alliance, a group specifically focused on cutting-edge advice on legal industry IT, innovation, and LegalTech. Fellow founder Peter Owen leads Lights-On Consulting, one of the most experienced legal IT advisory firms in the market. Lights-On has just released an extensive and impressive multi-part overview of IT ‘considerations for the post-lockdown law firm’ and Peter and Chris have worked together to produce this condensed summary of some of the major points in their articles exclusively for our Edge audience. Links to the full Lights-On articles are provided at the end of this piece for readers who want to take a ‘deeper dive’ into this business-critical subject.

In this first of two parts, we look at the technology issues for management teams as they integrate the emerging new ways of working into their firms, at the same time as reopening offices and bringing all areas of the business back on stream. At the heart of those changes is a shift towards a hybrid, agile office and home worker model; whether as a medium-term measure or, for an increasing number of practices, a permanent one.  The underlying theme for all law firm leaders is the need to balance fast-tracked, short-term decisions and actions with an emphasis on medium-term recovery and resilience.

Technology and your people post-lockdown

The Covid-19 crisis and the disruption to lives and livelihoods that have followed have had a spectrum of affects upon individuals, including the people who make up every law firm. It will take a long time for employers to understand and then respond to all of those affects. Technology has had a crucial role to play in enabling people to keep working – and earning – through the crisis and will take a similarly heavy load in facilitating a return to the workplace, supporting a continuation of remote working or blend of remote and office locations (“bi-modal” operations). But intense use of technology has also created new issues and well-being concerns and addressing these will also need to be front-of-mind over the coming months and years.

A new operating model

To comply with social distancing, offices need to be sparsely populated initially and many firms throughout the world are planning for a sustained period where teams will be operating with a blend of office and home workers.  Many firms are planning for only 25% to 30% occupancy initially due to desk layout, circulation corridor and communal area issues. Alongside that, business continuity planning must contemplate a non-linear progression to the recovery and be prepared for further waves of lockdowns which may force a return to mandated home working.

Positive productivity benefits, potential real estate savings and the rapidly growing popularity of an agile working model are now beginning to feature prominently in firm’s medium to long term planning too. Even before lockdown has ended, we have already seen some firms of all sizes announce a permanent shift away from the office as a default location.

The hybrid agile, bi-modal model, enabling working across multiple locations and at any time, seems likely to emerge as the new standard for a majority of law firms. But making that highly unpredictable and constantly flexing approach to work successful in the long term is a different order of problem to the temporary burst of ‘best endeavours’ effort required to get the firm working from home at the start of lockdown. Even if that were the only priority your IT team had to support over the next year or so – which we will see it definitely is not – it would already represent a massive workload and change challenge.

Adapting your firm to the hybrid agile world

Ironically, health & safety compliance may have gone backwards in the short-term as firms dashed to ensure people could work from home, with very few home workstation assessments due to lockdown and an overwhelming volume of home workers to support. More prolonged home working in a more settled post-lockdown world will impose greater obligation to carry out regular audits and self-assessments that assure employee’s wellbeing. Check your capacity to handle this and tighten up your policies on equipment provision, as well as on compliant home working environments. Don’t forget that a bi-modal world will have impacts across a range of areas from insurance policies and electrical testing to expense policies (for items such as home utilities and telephony charges).

Consider home worker kits to prevent the need for transporting equipment to and from the office. This may only be affordable if firms turn to stocks of ‘second life’, pre-used equipment; which brings its own support issues. Consider a policy of retaining older equipment as spares or for home use.

It is critical to understand that working from home does not mean ‘resting’ and we can already see that home workers easily get burned out, “Teamed out” and “Zoomed out”! Many have gone the extra mile to deliver either internal or external service during a pressured time. You may have already recognised that, but it may be worth re-iterating your appreciation, as the return to office effort will also take its toll in terms of adapting to another set of physical and psychological changes. The main burden of communicating and managing this adaptation process falls on leadership, line managers and HR, but IT have a big role to play too and will often be on the ‘front line’ when it comes to dealing with the challenges people across the firm encounter.

IT support in the new world

Firm and IT leadership both now need to plan for extended hours of service and further waves of heightened IT demand. IT may be the first function needing to reverse furloughs and even considering additional staff in response to the new pressures they will face.

From an IT support perspective, lockdown has meant supporting multiple home working locations with different set-up, connectivity and risk factors. Homeworkers may be sharing parental and home-schooling care or responding to a range of other factors which have created very varied working patterns, including more evening and weekend working. As a result, firms are now also facing extended hours of demand on IT teams.  For IT support teams, it can feel like the job has changed from supporting one office 8am-6pm Monday-Friday to supporting 80 separate home offices 24×7.

IT teams have worked hard and fast to deliver home working but what will the next stage demands on the team be and how should leaders prepare? With a return to some form of office-based working your IT team will also be under pressure to resume some form of physical 2nd-line support; including physical visits required to re-install equipment that people have brought back into the office. We believe other issues, bringing both opportunity and risk to the firm, include:

  • Training – Can we use what has happened to transform how we train people? What doors to new digital training methods have been opened-up and what new approaches and technology will work? Certainly, with new applications and ways of working having been adopted very rapidly and at a distance, really embedding skills and consistency is now a priority. Many larger firms with centralised support models already utilise online conferencing tools to deliver training to their offices, but this approach is now ripe for adoption by smaller firms too.
  • Printing – It is sad to say that all wars advance technology and this war against a virus is doing the same. Widescale adoption of a range of digital tools and a more genuinely paperless way of working has been forced upon lawyers in 2020, including reviewing contracts on screen, e-signing and electronic workflows. If printer-less and paper-free working is possible, now does feel like the moment the legal world has to finally bite the bullet and severely restrict (or consider removing altogether – as we have heard of some firms doing whilst people are out of the office) local printing facilities in the office. Bold firms can benefit from such a change and not simply accept a return to the pre-crisis reflex tendency to print unnecessarily.
  • Conferencing Apps – whilst we might expect ‘peak Zoom’ to be behind us now (they have seen a 30-fold increase in users), the relative importance of virtual meeting and conferencing software in the legal IT mix has shifted forever. These tools are now set to be a critical component of client service, collaboration and the day-to-day reality of how teams work together. Internal IT knowledge and skills in this area, from 1st line service desk right up to strategic application management, needs to be ramped up, especially as the range of options extends and new functionality – such as automated translation and subtitling – promises to make a virtual meeting a more effective and sophisticated option to meeting face-to-face. The immediate post-lockdown period will put your IT services under an extended period of pressure yet again, with an even more complex range of demands than they faced during lockdown itself. It is hard to avoid the conclusion that law firm IT will never return to its pre-crisis shape, with a number of factors driving that permanent change:
  • High Tempo Expectation Management – your IT team has pulled out the stops under difficult circumstances and delivered in days or weeks all kinds of solutions that would normally take months. Has this now re-set expectations of IT going forward? That could be dangerous; IT may have been forced to cut corners to meet deadlines and now have to contend with delivering on the expectation of a high tempo forged during a crisis, whilst bringing back the governance standards partly foregone.
  • Super-user support – the normal support regime where the 1st port of call for basic IT advice is the “secretary next door” has been disrupted by social distancing and remote working. Consider granting those super-users the same sort of screen takeover tools that the service desk has (with appropriate security rights and training). In-team lawyer support can continue while stretched-IT resources can be reserved for the most technically difficult tasks.
  • Hot Desking – for now, flexible sharing of desks is against most governments’ recommendations and so the vanguard of firms which had implemented hot desking to maximise floor plate flexibility are having to reconfigure layouts, processes and technology to ensure that desks are only used by one individual. For those many firms looking to reduce their real estate footprint over the next year or so, this will restrict that opportunity for a period until government advice and individual confidence consider hot desking safe again.
  • Safe ‘at-desk’ support – difficulties are likely to result from hands-on IT work, where it is tough for IT support and the user to stay the 1 to 2 metres distance apart. Remote access and support will need to take more of the strain. All-in-all, it is probably unrealistic to expect physical 2nd line support to return to its pre-crisis format or extent, maybe ever. In a hybrid agile model, IT support is going to be principally remote and digital, providing a consistent offer to workers wherever they are sat on the day.
  • Incidents versus Service Requests – the service team may have spent the last 3 months focussed solely on fixing incidents. As the firm adjusts to post-lockdown working, it is important to use the data from the firm’s Service Desk to ensure IT resources are delivering the biggest bang for their buck – get IT back on the front-foot tackling the most important service requests and improvement projects, not continuing to just react to issues.  

Easy to overlook essentials

As offices are, even if only partially, reopened, IT teams and management have a host of tasks, large and small, to schedule and complete. Some might be easy to overlook but are, in fact, critical to get right. Here is our ‘don’t say we didn’t tell you’ list for firms to be certain they don’t overlook:

  • Re-start testing – during lockdown, with so many people working at home, there will be office equipment that has not been utilised in some time. A physical audit and test is recommended before the doors to offices are flung open again.
  • Check your supplier agreements – do your service level agreements cover support to your business if your people are working remotely or in a bi-modal set-up rather than all office-based? With remote support likely to be required for an extended period now, re-examination of commercial terms may be required. Conversely, if you are now expecting suppliers to come back and work on-site, what provisions do you and they have to put in place to ensure safety and mutual compliance with respective Covid-19 related policies?
  • Internet – examine your internet service contracts and bills and assess whether your set-up is optimal for supporting the volume of people now coming in and going out via the internet line.
  • Hack Amnesty – tech savvy lawyers will have found very innovative ways of collaborating, sharing and working remotely offline in recent months. They may have even tried the odd YouTube hack here and there to work around governance that makes remote life difficult. Face up to these grey areas head-on; you should survey your end users (and your IT staff) confidentially to find out what was good, what got in the way of working and whether they found work arounds or “hacks” to the system that you might want to adopt and share more widely.
  • The Environmental opportunity – a comment made many times in mainstream press coverage of the crisis is that some of the most important priorities which were dominating thinking and gaining momentum pre-Covid have been side-lined and are at risk of stalling. Within your own sphere of influence don’t let that be the case in terms of reducing your firm’s own carbon footprint; there are multiple ways in which technology (albeit also a primary driver of energy consumption) can help push your environmental performance to the next level, including reducing paper and energy consumption.

Thinking one step ahead: what comes after ‘what’s next’?

Over the time span of the Covid-19 crisis so far, IT capabilities have been fundamental in achieving a swift transition to remote working and maintaining client service and team working in uniquely difficult circumstances. That task, though undoubtably challenging, was unambiguous. The next phase is much less clear-cut, as lockdowns around the world ease at different paces and myriad variations on a hybrid model take hold. This feels a bit like the family vacation; the return journey may feel longer and less rewarding than the sudden adrenalin rush of the start of lockdown and those making the journey back are now tired, bored and no longer in the best of spirits.

We have tried here to provide some practical insight into how to handle the technology component of this tricky period. But we have also drawn attention to how the crisis has seeded what we believe will be permanent and significant changes to the way law firms operate.

Firstly, the emergence of a hybrid/agile operating model, with previous resistance increasingly replaced by strong support from clients and employees alike.

Secondly, the acceleration of digitisation across the firm. Your lawyers and support staff will have got used – to varying degrees of success – to getting work done both remotely and digitally. Allowing a reflex return to more conventional ways of working in your firm, even for just a few more months, risks undermining your ability to compete over the next few years. Firms reluctant to fully embrace digital working and who ramp back up their use of paper and retreat from the intensely agile model of the last few months might quickly find themselves literally years behind direct competitors in terms of efficiency, agility, client service excellence, appeal to new talent, value-for-money and, ultimately, profitability.

Those emerging trends are not without serious risks and challenges, but they also offer law firms enormous opportunity to reinvent the way they work and present themselves in a new light to existing and prospective clients and professionals. Coming soon, in the 2nd and final part of this short series, we will turn our attention to the specific digital innovations and trends we think will dominate the legal landscape over the next few years, as the implications of the crisis for the sector play out.

Further Reading: the full Lights-On papers summarised in this article are available to read on the Lights-On Consulting website:

Thanks also to Lights-On consultant Stephen Brown for his great contributions to this piece.

Law Firm Resilience in a Crisis: Practical Guidance for Action (A Four-Part Series)

Chris Bull, Jonathan Middleburgh, Leon Sacks and Yarman J. Vachha

Introduction

It hasn’t taken long for the statement that “We live in unprecedented times” to become a universal cliché – Covid-19 and the resulting financial crisis is impacting all businesses far and wide and it will certainly get worse before it gets better.

As consultants who work in the legal industry, located in multiple countries and continents and already building up a stock of real-life, often hands-on, experience of this uniquely challenging period, the Edge International team have an opportunity to observe, compare and consolidate what we see across the legal world.

Our “Law Firm Resilience in a Crisis” series of papers is the output of that process. For four weeks in April and May, 2020, we identified a number of topics that were at the top of the crisis agenda for legal leaders and we reported on these one by one. Due to their popularity, and for the convenience of our readers, we have now gathered these four articles together into one report. Part I focuses on Financial Resilience, Part II on Operational Resilience, Part III on Commercial and Client Resilience, and Part IV on People Resilience.

Edge International colleagues have also kicked-off a companion thread on “Remote Working” in the legal industry, and we will regularly cross-refer between these streams.

PART I. Financial Resilience

Financial Resilience in Context

Financial actions, even in the midst of such a fast-moving and impossible-to-predict crisis, should not be taken in isolation. There is a serious risk that apparently obvious corrective action on the financial dimension can have damaging consequences in other areas of the business, undermining confidence or the firm’s ability to compete or recover. Financial decisions need to be made more quickly than perhaps at any previous time in your firm’s history, but they need to be made in context and in line with a clear strategy and direction.

The need of the hour is strong and decisive leadership. Leaders need a “laser-like focus” on the direction they wish to set, and a clear strategy to navigate these troubled waters. The current situation is akin to being at war and leaders need to assemble a small group of experts that can provide strong direction and respond very rapidly to developing events and emerging information. In the current environment, the law firm cannot be run by consensus as it would in normal circumstances.

The key is not to panic, be resilient and rest assured in the knowledge that we can get through this. When we emerge from these troubled times the world will be different, generating new opportunities – many of which we cannot foresee at the moment. Whilst it may not seem to be the right time to be thinking about the future, the actions taken during this period will determine your future. So be Bold!

Business Continuity Planning

A word about business continuity planning. We will return to this topic in upcoming papers, but it has been a massive focus for many of you over recent weeks, and it would be wrong to dive into any discussion of resilience without addressing a few points on business continuity.

Many firms have probably thought about creating a business continuity plan (BCP), or reviewing and testing a dusty old BCP, in the recent past and have put it off in the “too difficult” box. Well, guess what? It’s here now and unfortunately many businesses are ill-prepared for the crisis we are enduring. If there is a lesson that can be learned from this unfortunate situation it is that a good, up-to-date BCP is like your most fundamental insurance policy and a must in all businesses.

Once the crisis is over, and before the next one emerges (and there will be a next one), we would urge you all to get the necessary expert advice and put in place a BCP suitable for your firm. As importantly, now is not the time to neatly pack away your BCP, thinking that it is only there for dealing with an immediate, very short-term and short-lived moment of crisis. A good BCP will help guide you through the next three to six months; your business continuity will be tested and could be permanently damaged as we move forward into the next stage of the crisis.

If there are three BCP learnings that we can take away from what we have seen already, we would highlight the following – each of which has a financial implication:

  • All-round IT robustness, especially Internet connectivity, accessibility and bandwidth (in all your home and remote working locations and not just in your offices), is key to legal businesses in the 2020s.
  • Laptops and remote working access on other devices for all staff is the new norm. The cost of this is far less than the cost of the disruption to your business. The best-managed firms had it in place already, the next best were able to roll it out quickly; but many others are still struggling to get the whole firm connected and working as well as they did in the office.
  • The job now is to develop, enhance and fix the bugs in that hastily assembled remote connectivity; that will continue to exercise minds and stimulate innovative responses through April, May and into the summer. Without going crazy buying every remote working tool you ever heard of, this effort will rightly be a spending priority amidst a period of cost-cutting.

Financial Resilience Priorities

At this time, firms have to refocus their financial objectives and priorities. Resilience is the key. Pulling the firm through the immediate lock-down, economic crash and wildly fluctuating uncertainty is the first financial resilience goal. Reshaping the firm’s financials for the recession that has already begun is the second goal. Preparing the firm to recover as quickly as possible and thrive as conditions begin to improve is the third. These goals are achieved through:

  • Protecting cashflows
  • Managing costs
  • Coordinating financial strategy with staff, clients and banks
  • Building confidence and morale
  • Looking for opportunity and embracing change; restructuring the business for the recovery, whenever it comes, and for the post-crisis future

We outline below some very basic steps in building financial resilience in these times.

Monitor Cashflow Daily

  • “Cash is King” – This saying is true at all times, but especially in our current situation.
  • Establish what your existing cash balances are.
  • Create a detailed daily cash report to monitor the movements of cash in and out of your cheque and savings accounts. Don’t forget to include credit and debit cards.
  • Add to the daily cash report all known inflows and outflows of cash on a weekly basis for the next four to eight weeks. Install a clearly communicated policy of ‘no surprises’ and insist that the central finance team is aware of all potential outgoings.
  • This gives you a picture of your immediate cash needs for the very short-term future, particularly direct outlays (e.g., rent, partner draws, wages, supplies, etc.).
  • All discretionary costs should be frozen until you can assess the situation and decide the costs are relevant to the current situation in your jurisdiction.
  • The daily cash report does not need to be perfect, It is just a document to assist you in managing cash – with a wide-ranging diagnosis of the health of the cash in the business.

Bill, Accelerate Cash Collection and Accounts Receivable

  • Professionals are generally reluctant to talk with their clients about fees, billing and collections. In times like these it is much more difficult.
  • Now is not time to be shy. The survival and health of your business is based on the amount of cash you collect and the speed with which you collect it, so pick up the phone and ask for amounts due to you to be paid. A phone call is far more powerful than an email; it is “personal”, you can empathise with the client and strike a deal with them.
  • Invoice for everything that you can bill for. Remember, your bills today are the source of cash flow in a few weeks’ time. If you don’t invoice, you cannot attempt to collect in a few weeks.
  • You may consider doing deals in terms of discounts or instalment payments, or defer part of the outstanding fees; indeed, these steps may be essential to achieve any cash collection from some clients in financial difficulty. The key right now is to maximise your cash.
  • On future deals, if you can get paid partially upfront you should consider this. When taking on new work, insist that already outstanding bills are paid before you begin work.

Manage Your Costs

  • This may seem a very obvious statement, but costs should not be cut indiscriminately – there should be a strategy in place.
  • Direct costs such as rent and staff costs cannot be cut easily, but there should be a strategy for this – perhaps a rental reduction agreed with, or deferment from, the landlord. Consider re-negotiating a new long-term lease with the landlord. Consider also cutting or deferring staff salaries and partner draws. This will focus the mind of partners that cash is vital and will put more urgency behind the cash collection effort.
  • Freeze hiring. Use redeployment and share underutilized resources between teams and departments to address gaps.
  • Consider the “Pyramid cut” if job cuts or furloughs are required. Look at your organisation structure as a pyramid, so when you shrink the organisation you cut a portion of each level equally; e.g., the business to shrink by 20% top to bottom. If the leverage in your pyramid is not competitive, consider adjusting it at this time. It is no use just cutting trainees and support staff as this will not be effective and the cost saved may not be significant enough. Remember that business will come back in time, and in the short term you will be scrapping for as big a share of a shrinking market as possible, so be strategic in what you cut by keeping an eye to the future.
  • Now is the time to seriously consider addressing your non-performing businesses lines, lawyers, support staff and part-timers that do not add to the business in this crisis. Areas and roles that you were struggling to entirely justify pre-crisis cannot be ‘carried’ through this period without damaging your firm. This needs to be done strategically with an eye to what business may come back at the end of this critical period.
  • It is important that the people that are retained are paid fairly as you need to maintain morale, especially when people are isolated and working remotely.
  • Variable and discretionary costs should be assessed and anything which is not required (i.e. “nice to have”) should be frozen or cut. Identify your biggest suppliers and have a conversation with each one about reductions in service or cost or deferred payment terms.
  • Close your premises if you are not using them, paying close attention to ensuring that running costs do not continue. If you have upcoming real estate lease breaks, this may be the time to decide to cut your square footage. Most law firms are already sitting on office space that is poorly utilized – especially those still working in cellular layout – and every prediction about the world post-2020 suggests there will be a dramatically reduced need for as much white-collar office space. Make your move now if you can.
  • Do not cut your business development costs drastically; this is a mistake made by many organisations, as it’s an easy target. This category is distinct from general firm marketing and brand promotion, the “business as usual” activity which will not cut through in this climate. The investment in BD should be very focused and tailored on specific topics which are on top of clients’ minds currently, and on the practice areas where there is the best chance of winning new business and improving market share. Most importantly, all non-digital BD and marketing spend (e.g., events, face-to-face networking, travel) can, of course, be frozen in the short to medium term.

Build Your Cash Reserves & Credit Lines

  • Building a cash reserve is now more important than ever. In an ideal situation, you should have sufficient cash in the bank to survive four to six months based on your reduced cost structures.
  • If you are entering this uniquely challenging period with low or no cash reserves, your focus should be on managing your finances to maintain your cash position, and not to allow bank debt to spiral. Your target is to avoid cumulative months of net negative cashflow, and plan to achieve net positive flows as fast as you can when there are signs of improvement. This may be the time to consider partner capital calls in order to address a structural imbalance between borrowing and equity.
  • Remember that you may need to build redundancy costs into your estimations. In general, most significant cost reduction actions will have a lag time before cash outgoings reduce (examples are notice periods and dilapidations on real estate).
  • Speak to your banks and get a credit line (revolving overdraft/credit facility); if you can, avoid term loans that you have to service every month, as this creates cashflow pressure.
  • Many governments are providing support to businesses and employees, especially to SMEs; tap into these as much as you can, especially where employee-support packages allow you to furlough but retain staff on payroll and governments are supporting low-interest bank lending.
  • Once you secure the credit line/government aid, use these as the principal sources of cash as the interest on this financing is cheap. Keep any actual cash reserves as intact as possible as your reserve fund for when you have no further credit sources to turn to.

Forecast & Budget

  • Reassess your budget for the year by doing a rigorous profit and cash forecast. This should be reassessed monthly until the end of the year.
  • Be clear with staff about 2020 financial year targets: in a period of extreme uncertainty and with gaps appearing in your fee-earning resources, now is not the time to be rigidly insisting that personal or team targets, set in a different world, are met. How do you re-set realistic, achievable objectives? Be seen to support the achievement of the best possible performance, not trying to drive it from ‘the top’.
  • The budget for the following financial year should be prepared with an eye to recovery.
  • Ensure managers and partners understand that all expenditure budgets are effectively ‘unbudgeted spend’ and require additional, just-in-time review and approval. Prioritize spending requests rigorously and request clear return on investment and payback period assessments. This is the time to put some extra priority on actions that will bring in work or improve cashflow in the short term.

Six Takeaways

  • Don’t panic: You can get through this. The legal industry, and your firm, has faced major crises and recessionary periods before, and will again.
  • React logically with a strategy. Do not “knee jerk” or “react emotionally”
  • Lead from the front: Communicate, Communicate, Communicate
  • Plan for the future. The way we do business currently will not be the way of the future. Invest in technology and ensure you build financial resilience in the business for the future. Rethink the shape and scale of each of your practice areas, sectors and geographical locations: the next few years will not look like the last few years.
  • Invest in and have a robust IT infrastructure and BCP for future crises. The future of legal practice was already digital and that future is now here; eliminate paper, wet signatures and actions that rely solely on face-to-face interaction.
  • Most importantly focus on how you can service your clients through this difficult time and how your actions help you to retain or gain a well-earned “seat at the table” as their trusted advisor.

PART II. Operational Resilience

While the financial impact of a crisis is what immediately grabs the attention, operational adjustments are essential for business continuity and to compete in the new market reality. By “operations,” we mean the organization and support of the workforce to serve internal and external client needs effectively.

Operational Resilience Priorities

The top priority is to ensure that workflows and business processes are not interrupted. Where disruption cannot be avoided, leadership needs to adapt previous processes rapidly and definitively to meet the challenge; we have recently seen this in practice in firms which moved quickly to an entirely virtual and digital operating model.

The second priority is to provide the means and resources to operate efficiently during the crisis. The ranking of executive-agenda issues and items of expenditure will almost certainly need to shift for the duration of the crisis and possibly beyond.

Considering how operations should be restructured to serve the market post-crisis, and planning the investments necessary, is the third goal. These are key to sustained operational resilience.

The goals are achieved through:

  • Effective and proactive leadership and streamlined decision-making processes
  • Supporting mechanisms for people
  • Robust communications – more regular, transparent
  • Adapting infrastructure and allocation of resources
  • Embracing change with a positive attitude

We elaborate below on five actions that can enable achievement of these goals.

  • Crisis Management Team
    • Put in place a process for strong and decisive leadership that can set priorities for the organization and take calculated decisions based on information available.
    • Assemble a multidisciplinary team of experts (e.g., from Finance, Technology, Operations, Human Resources, Communications) that “meet” more regularly and both provide strong direction and respond very rapidly to developing events and emerging information (the “Crisis Management Team” or “Response Team”).
    • Unlike normal circumstances, it is not possible to gather all facts to make a pondered decision in a crisis. The uncertainties do not allow this to occur in an adequate time frame. Certain risks are inevitable to avoid the greater risk of inaction.
    • It is incumbent on senior leadership to break from a decision-making model based around iterative consultation and reporting and delegate authority for an accelerated response where appropriate.
  • Supporting Mechanisms
    • The safety of your people, both physically and psychologically, is not just a moral responsibility but a key to maintaining stability and productivity. Furthermore, people need assistance and tools to be able to adapt to new realities.
    • Provide guidance in a simple straightforward format as to how people can maintain their well-being and continue to perform their functions, especially working remotely and connecting virtually with clients. Issue a list of “go to” people for different subject areas, with their contact details.
    • Establish an on-line information hub, or resource centre, including FAQs. This is a repository for the orientation, resources and materials (e.g., “how to” and “what to” questions) that people may consult at any time. These FAQs must be regularly updated to respond to the changing nature of the crisis and how it is being managed.
    • Engage with clients to understand their concerns, how they may be supported and how the firm is capacitated to continue serving them during the crisis. (We will comment more on client relationships in Part 3 of this series.)
    • Support the best possible performance that can be expected of professionals in the changed scenario (may vary significantly by practice group) and do not insist on pre-crisis goals that may no longer be attainable (e.g., billable hours, fee targets); doing so will always undermine leadership’s credibility amongst professionals. Also, provide orientation on how best to use any “down time” (e.g., on-line training, updating precedents, reconnecting with previous clients and contacts, etc).
  • Communications
    • Communication is leadership’s strongest tool to build confidence and morale and, as a result, assure collaboration across the organization and with clients and other stakeholders.
    • Create a plan and stick with it. Communications need to be frequent and consistent, and must address questions and concerns of the audience. Transparency and setting the right tone are key to effective communications; after all, the objective is not only to inform but also to calm fears, generate confidence and sustain morale.
  • Staffing Needs
    • Redeploy and make the best use of talent. While rightsizing may be necessary, and we indicated in Part One how cutting of staff needs to be strategic, do not over-prune so that you prejudice the ability to gear up post-crisis. Look for the opportunity to reallocate staff from a practice area with depleted business to one that is busier.
    • Similar to reviewing practice-area loads, evaluate geographic spread (where appropriate) and how offices and groups might best share resources or work on a more integrated basis.
    • Consider the overall legal staffing mix and opportunities to delegate aggressively to maintain productivity while, of course, assuring that service quality will not suffer.
    • Take advantage of the crisis to rethink support-staff needs. This is not only a question of quantities and types/level of experience but also an opportunity to present challenges to promising talent.
  • Infrastructure and Supply Chain
    • Take the necessary steps (which will depend on the level of preparedness) to enable fluent remote working capability, empowering the technology experts to engage with outside vendors for the essential, appropriate solutions (devices, internet connectivity, collaborative platforms).
    • While moving quickly to assure business continuity, there should be enough oversight to determine that key risks such as security of data, business interruption through loss of internet connectivity and compliance with data privacy requirements are managed. This could well entail obtaining a second opinion on the capability of systems and applications to be adopted.
    • Develop practical training sessions and resources to enable the use of new technologies and educate all users. Now is the time to focus on providing assistance and tools and not just on procedural matters.
    • Engage with suppliers and determine how best to modify service delivery and service terms. Remember that these entities are facing their own challenges and will be keen to either maintain business or promote opportunities.
    • Apart from technology service providers, pay attention to logistics (e.g., physical delivery of documents and materials to a more distributed population, travel arrangements) and consider outsourcing options, even if interim, to eliminate bottlenecks.

The Bottom Line

During a crisis period, do utilize the power of the “team” and coherent engagement with all stakeholders (workforce, clients, suppliers). Do not expect the processes, priorities, performance metrics or governance solutions that worked just weeks before, pre-crisis, to see you through this new normal; be agile and prepared to adapt very rapidly across your business.

Whilst responding smartly to the immediate demands of the crisis, never lose sight of your – now altered – roadmap; ensure you consider how to restructure and invest for tomorrow.

PART III. Commercial and Client Resilience

As the three Edge International authors of this paper are based in Europe, Asia and the Americas respectively, we aim to synthesise our experience and observations of different legal markets that are also at slightly different points in the evolving Covid-19 crisis. As with the previous papers, we wanted to foreground practical actions that law firm leaders can use in their firms. In this case we have posed and responded to ten core questions many firms are asking themselves as they grapple with a uniquely challenging crisis; we want the paper to serve as a quick self-assessment checklist. Our ten questions fall under three themes: client relationships, business development in a digital and virtual world, and commercial strategies.

Resilience and Client Relationships

  1. How are you supporting your clients?
    This will be one of multiple places where you read someone preach the message that, in times like these, you have to put clients first. But what does that mean in a practical sense? In our view, the critical challenge is that clients need to see how you are supporting them through what will be as tough a period – probably tougher – for many of them as it will be for you. The future loyalty of your clients as the economy recovers will be dependent on how you behaved during the crisis. That involves investigating and understanding the biggest issues and concerns your client has, and tailoring your communications, offers of assistance, updates and terms and conditions to those issues and concerns. They should be specific for your largest, most important clients and as tailored as you can make them to groups of clients in sectors, regions, etc. Your support might include some leeway on pricing, billing or collections, although that should obviously be carefully considered in the light of your own financial position.
  2. Are you getting through to your clients?
    The latest Covid-19 crisis has yielded a barrage of the kind of broadcasting updates and generic statements from a range of companies that we have become used to around any economic or legislative event (including, early on, a stream of bland reassurances that it was ‘business as usual at Firm X’) – except on an even bigger scale. This blizzard of ‘noise’ on social media and coming into Inboxes is impossible to navigate or consume. Your clients want, based on your insight gained from (1) above, personalized, tailored and value-adding communications. Calls are great and many clients are much easier to get hold of right now. Emails or messages should stand out, and personalization (i.e., coming from a name they know, not a corporate or marketing mailbox) is key to getting that done.
  3. Which services and practices are you promoting?
    For almost all firms, there needs to be a rapid re-prioritizing of which practice areas and services should be marketed and highlighted to clients. Within the space of a month, the markets have flipped; in many cases, that has meant a sudden drop in corporate and real estate transactions, a boom in interest in labour and restructuring law, a refocus onto different clauses in commercial contracts, and a spike in wills and estates work. The exact pattern differs between jurisdictions and firms. At the same time, corporate legal departments will be trying to keep their own teams busy, and restricting further the flow of certain types of work out to external counsel. The overall rule holds true, though: firms need to pivot to ensure clients are presented with the firm’s credentials in areas they may not have used in the past. Client-relationship partners will often need to communicate the services of practice areas they don’t work in and know less about. Cross-firm collaboration at this point is critical.

Resilient Business Development in a Digital and Virtual World

  1. Have you rewritten your marketing and business development plan?
    If not, you need to to so, and quickly. Much of the activity you had planned – events, networking, secondments, training programs – has been blown out of the water by lockdown. It will probably take a long time for this kind of ‘business as usual,’ in-person marketing to regain its full effectiveness, assuming it ever does. For many firms, you will be looking to cut costs for a period and marketing will be in your sights. However, cut too far and you risk competitors getting close to your clients and your firm becoming invisible at a critical time. We recommend that you review and rewrite the plan you had, probably reducing overall spending but re-prioritizing ruthlessly. Ensure those practices that are most buoyant in this economy get profile and are highly visible online and in your communications. Rank higher the investments of time and money that can provide a faster payback period and short-term return on investment. In particular, ensure that your digital impact is really effective – at a time when the only way for prospects and clients to stay informed is digital, you have to be at the top of your game.
  2. What are your partners and lawyers doing with their time?
    OK, in a crisis situation many senior lawyers will be very busy; their particular practice area may be booming, they may be covering for furloughed colleagues, they may be asked to step up as part of your emergency team. In the Covid-19 lockdown, most lawyers, however, are working from home and have reduced levels of new work, no travel time eating into their day and no in-person networking duties. We talked about personalized, regular contact with clients above, and that is where a chunk of this available time should be redeployed: video calls, ‘virtual coffees’ (or drinks, later in the day – we have seen some nice Zoom ‘home bar’ backgrounds!), quick check-in messages on social media. In addition, this is the time to fully engage your senior lawyers, some of whom haven’t really embraced or become comfortable online before now, in posting and sharing their insights on social platforms and in articles. Quality and tone are important; do ensure you have enough marketing resources to edit, coordinate and help promote these efforts.
  3. Is your digital delivery of client services good enough?
    For most firms in the current crisis digital delivery of legal services to clients will, by now, be in place and working. A few months back many law firms would not have responded ‘Yes’ if asked whether their interaction with clients was almost entirely digital but, right now (including via Zoom, Teams, WhatsApp et al), almost all would. However, clients will not be tolerant for lots of glitchy, taped-together digital processes; in their dealings with other professionals and service providers they will be exposed to some very slick models indeed. Soon, they will expect you to be just as good. And this is one thing extremely unlikely to revert when we return from lockdown – streamlined, painless, reliable and ideally paperless legal services will be a badge of a quality law firm. So, we suggest you continue to evolve and develop your digital services over the coming months. Do not assume you should scrape through to the time when you can get back to everyone in an office with piles of paper and clients happy to travel distances to come and visit.
  4. How does a new client find you?
    This is critical for private client work, but still a big factor for B2B services; in a world which is now even more reliant on internet searches, social media and online directories and recommendations, you need to be very certain how visible your firm is in these media. Does your online presence and Google ranking do justice to the quality and expertise of each of your practices – most especially those which you need to drive the firm’s performance over the next year? If not, this needs fixing; many firms will acknowledge that they haven’t paid as much attention to their search engine optimization (SEO), pay per click (PPC) and social media performance as they could have until now.

Commercial Strategies for Resilience

  1. Do you have the commercial data you need to make quick decisions in a crisis?
    This is a major area of research and development for us at Edge International, and we believe there is a case for most firms reviewing and overhauling their production of management information (MI) without the catalyst of a crisis. But a crisis certainly exacerbates this issue, especially one where we have such high levels of uncertainty, a very sudden stalling in key markets and the breakdown of in-person collaboration and supervision. Providing real-time information feeds to partners, team and department leaders and leadership are incredibly important, but also structured and packaged MI on a weekly, rather than the conventional monthly, frequency could be critical. We emphasized the need to track cash metrics obsessively in our first paper, but equally important is the tracking of pipeline and new activity: weekly trend reports that show how proposals/quotations, new matters and time recorded are progressing are critical to providing the firm with the lead indicators it needs to plan its next steps.
  2. Do you need to provide free or discounted advice?
    This is too big a question to answer in one paragraph of a short paper, but it is one that would definitely make the ‘Top 10 Most Frequently Asked Questions’ from law firm partners right now. Many existing clients and potential new clients have short, urgent questions in the current crisis; typically, these are about providing latest updates on government crisis support or on one legal issue, and sometimes they involve a bit of interpretation. Clients are often cash-strapped, laying off staff and cutting costs. So there is understandable pressure on lawyers to provide a quick piece of free-of-charge advice. This is easiest to justify in the case of loyal, ongoing clients who are continuing to provide instructions – it is a statement of support from the firm in return. For new clients, it could help lure in more substantive new work, but we encourage firms to find ways to link the provision of this initial advice beyond simple information updates to some commitment by the client. This could be in the form of a new advisory retainer service that will run through for a fixed period, with some initial free or discounted hours.
  3. Should you ask for money upfront for new work?
    Some readers will respond by saying ‘we already do’ and where you have managed to embed this practice universally, well done! For most firms, such requests are harder to achieve but we do believe it is a sensible practice to apply wherever you can in a crisis and recessionary period, where many clients face an uncertain immediate future and firms themselves need to manage their cash positions with great care. For existing clients, do ask them to pay outstanding invoices before you begin a new piece of work. And where you feel it is necessary to offer debtors deferrals or instalments of their outstanding invoices, do ensure you link this action specifically to your support for clients during this difficult period.

    Our final checklist point brings us neatly back to the first question: How do you demonstrate that you are all about supporting your clients through this crisis? That is the right point to wrap up Part 3 of the series.

PART IV. People Resilience

In Part IV, we look at “People Resilience” a) during lockdown, b) during transition out of the current crisis and c) during the ‘new normal’ – i.e., what will make for a resilient workforce post-crisis.

A) Resilience During Lockdown

Firms are now several weeks into lockdown and many countries are looking at easing restrictions or have already started to ease restrictions. While lockdown is still in place, we would recommend that firms focus on the following:

  1. Staying close to your people
    There is a danger that employees will start to feel isolated as the lockdown continues. This applies equally to lawyers and to support staff. We are seeing some law firms keeping very close to their workforce so that their people feel highly supported during lockdown. Other law firms are not doing enough. Staying close to your people means checking in with them regularly; line managers should be checking in with their reports at least once a week. Contact should be maintained with furloughed staff, as well as with those working through the lockdown.
  2. Working to keep up team morale
    The novelty of working from home is wearing thin, or wearing off, for many. It becomes harder to keep up team spirit the longer lockdown drags on. Some law firms are finding novel ways to keep up team spirit – virtual team drinks, virtual team coffee breaks, team or office quizzes, competitions, dress-up days, bake-offs etc. Regular scheduled team meetings and touch points are also crucial, to keep up morale as well as to establish a credible source of information in a period of rumours and “fake news.”
  3. Asking the right questions in your regular one-to-ones with team members
    In a normal operating environment, prior to the current crisis, much interaction will have taken place with your team members on a casual or impromptu basis. As this is now not possible it is more important than ever to have regular scheduled one-on-one meetings with your team members. Whilst it is inevitable that the focus of these meetings be on work matters, make sure that you additionally use your regular one to ones to find out what is going on with team members on a personal front. Team members face a range of challenges during lockdown: lockdown and isolation can be anxiety provoking; there are challenges around childcare and the difficulty of working parents home-schooling their children or otherwise looking after young children; people are experiencing the loss of loved ones or the passing of extended family, friends or acquaintances. Ask open questions to find out what is impacting your workforce, listen to what is going on and be supportive.

    Some things to listen out for:

    • Is the team member living on his or her own? Does he or she seem isolated?

    • Are you sensing that the team member is having difficulty coping?

    • Does the team member have some other vulnerability that you should know about?

    • Is the team member juggling childcare duties with a partner? If so, are both working and having to split childcare? Does the team member’s workload need to be altered to take account of this?

    • Is the team member a single parent who has full responsibility for home schooling or otherwise looking after a child or children? Does he / she have any support?

    • Has the team member experienced a bereavement? Have they lost close family or friends?

    • Does the team member have elderly parents who are in isolation? Are they local or at a distance? Does the team member have other vulnerable dependents?

    • Is the home-working environment and equipment suitable; is it helping, or hindering, your team member?

    Depending on the response to some of these questions, think about what additional support the firm might be able to give. Is it appropriate to offer to involve HR? Is that a necessity? Does your firm offer external counseling or other external support?
  4. Remember that the support you show now will be remembered later.
    This is a time to build loyalty – and equally a time your workforce will remember if you don’t show support. Few people are likely to be looking to move firms during the crisis but failing to show support now may well be reflected in attrition figures post-crisis.

B) Resilience During Transition

The transition out of lockdown will probably last for months. It is simply too early to accurately predict the duration or phasing, which will vary from country to country, and perhaps from region to region within a country.

Some firms may well take their eye off the ball during transition when it comes to staying close to their workforce. There will be a temptation to focus on the operational aspects of the transition and to ramp up business development to the exclusion or partial exclusion of focusing on your workforce.

Our recommendation is that law firms continue to do everything we’ve suggested above during the transition out of lockdown. Additionally, it is important to remember that any transition can be deeply unsettling, so keep a particular eye out for any dip in performance from any of your employees or for any of your employees who seem to be struggling to cope.

Firms will have to take a clear stance on what a responsible employer should be expecting and encouraging as lockdown gradually eases. Health authorities and governments are likely to continue to stress that where work can be done from home it should be, and we expect that white-collar industries such as legal services fall into this category. Law firms need to examine how best they demonstrate their responsibility for employees, clients and communities. It is possible that society will regard the firms who continue home working for an extended period as the most agile and well-managed corporate citizens.

For the many firms who have had to take decisive action on staff costs in response to the first phase of the crisis – including furloughs, pay cuts, reduced working weeks – unwinding these actions as the lockdown eases and government support is withdrawn is going to be one of the most difficult and risky management challenges of recent years. If the economy and workloads continue to be depressed, potentially long after lockdown ends, reversing these actions will be hard to justify financially. At the same time, there will be intense pressure to get people back to work. Redundancies and hard financial decisions are inevitably going to follow in some cases and steering firms through these choppy waters is a subject we will return to soon.

It is also our view that the workforce is at a point where its craving some good news and some direction as to what the firm will look like when the lockdown has ended – this gives some hope to the employees and something to look forward to. Psychologically it is the proverbial “light at the end of the tunnel”. It is key that management exudes positive messages about the future through its communications. We would re-iterate that the old adage of “communication, communication, communication” is vital at this time.

C) Resilience Post-Lockdown – What Is Going to Be the “New Normal”?

We have no doubt that in the short/medium term there will not be a full return to pre-crisis ‘normal’. Most law firm employees have experienced working from home full time for several months and have seen how it can be both effective and productive. Those firms that have previously resisted flexible working will find it much harder or impossible to do so, post crisis. It is inevitable, in our view, that the pre-crisis ‘normal’ will be replaced by a ‘new normal’ and that seems to be the assumption of many firms that we are speaking to.

As indicated above, we are firmly of the view that those firms that rapidly figure out and communicate a new working model will gain a competitive advantage in terms of attraction of talent and retention of talent.

Here are some provisional thoughts about what ‘new normal’ might look like:

  1. Work from Home (WFH) Is Here to Stay, to a Greater or Lesser Extent
    The genie is out of the bottle on home working. It will be hard to deny a reasonable measure of flexible working for those that request it post-crisis. Not everyone will want to work from home, but some undoubtedly will, and this will be hard to resist.

    We very much doubt that most firms will suddenly move to a predominantly home-working model. As pointed out above, the novelty of working from home is already wearing off for many employees. Human beings are social animals and require social contact to a greater or lesser extent. We think it is likely that a variety of agile working models will evolve, with working from home one or two days per week becoming common practice.
  2. Some employees will want to work mostly from home.
    The savvy employer might be wise to accommodate some employees who want to work primarily from home. Some of the best lawyers might have individual reasons for working from a remote location – e.g., having a partner who has a job that ties them to that location. Those firms that are able to accommodate such employees, including new home-worker hires, will be more attractive employers and therefore better able to build a resilient workforce.
  3. The Green Agenda favours less office-based working.
    There is an obvious environmental argument in favour of having more of your workforce spending a greater percentage of its time working from home. An environmentally aware workforce is likely to be attracted to an employer that allows people to spend a significant percentage of its time working at home, avoiding excessive commuting and reducing the high energy costs of surplus office accommodation.
  4. Video communications will need to become more professional.
    Video meetings are likely to become increasingly the norm – at least for significant interactions. The new normal will seamlessly incorporate virtual/remote meeting attendees alongside in-person attendees. Firms have for many years spent large amounts of money upgrading their offices to look highly professional – and similarly spent large amounts of money on branding, websites, etc. It seems inevitable that video communication will become more professionalised – and that the days of employees presenting themselves to clients at a wonky angle in front of their kids’ nursery school art are probably numbered. We would suggest that law firms might need to invest in ensuring their employees have super-fast and reliable broadband at home, that they speak to clients using a green screen with firm-branded background, and that they are trained in how to conduct multi-party video meetings effectively.
  5. Flexible resourcing will continue to develop alongside flexible working.
    One of the harshest business lessons of the 2020 crisis has been the dramatic speed at which some legal practice areas have stalled, leaving firms with an almost immediate mismatch between workload and resources/costs. Economic conditions suggest this disparity is now settling in for a long stay.

    Firms have, in some jurisdictions, been able to turn to government support to furlough staff in the short-term. Others have reached for cuts in pay and drawings, reduced working weeks and, sadly, lay-offs to deal with the rapid threat to profitability.

    In an era of contract-attorney companies, alternative legal-service providers, fee-sharing freelance-lawyer models and the gig economy, this cliff-edge experience is leading firms to reconsider a resourcing model that is so reliant on permanent, full-time employed staff, located in expensive city-center offices. We have heard most of the Big Four accountants announce their strategic switch to a more flexible resourcing model in recent years, able to cope much better with swings in demand and economic shock (or opportunity). Law firms now need to start to develop plans for similar changes.
  6. ‘New Normal’ law firms will rethink how they occupy and configure office space.
    There will inevitably be pressure, not least from the CFO or COO, to reduce office space. Such pressure will be unsurprising when offices are currently empty, and there is only a very gradual return to office working as we transition out of lockdown, and yet law firms are continuing to function and to service their clients.

    Retaining a resilient workforce in ‘new normal’ will require some smart thinking about the best configuration of office space. For sure, there is likely to be movement towards more open plan and unallocated (hot-desking) workspaces in firms that have previously resisted open plan working. But designing the ‘new normal’ office will require some serious thought about:

    • how much total office space is required for your workforce?
    • how much breakout space is required and in what configuration?
    • how do you configure your office, including all meeting rooms, if video communication becomes the norm in terms of client communication?
  7. Firms that forget that humans need physical interaction will lose out.
    Some firms that we speak to are talking about conducting future partner meetings entirely remotely. Firms that have offices spread internationally are talking about the end of international travel. We would caution against attempting or expecting an extreme swing to entirely electronic communication. Humans are wired for physical interaction and video interaction is not the same as in-person chemistry, in particular when meeting people for the first time and developing a relationship. We believe that firms that rely purely on electronic communication will fare less well than firms that strike a balance between electronic and physical communication. In other contexts (e.g., interactions between world leaders) there have been vivid examples of how much can be achieved when people meet face to face. Law firms, in our view, will abandon physical interaction and connectivity at their peril.

Key Takeaways

  • Regular contact with your teams and individual team members is key and this should be cascaded through the entire organization
  • Psychological / professional support for employees who need assistance should be readily available
  • Management should communicate clearly on a regular basis
  • Management should be drawing up plans for the ‘new normal’ so that they can put these in motion once the governments ease restrictions
  • Consider how the new WFH plans will impact winning and transacting assignments from clients

Note: All four of the articles in this series can be found individually at https://www.edge.ai/category/articles/crisis-management-business-continuity-planning/. We will return to the subject of resilience in the context of crisis again over the coming months. In the meantime, the Edge International team would love to hear your comments and are ready to field questions about any aspect of assuring law firm resilience in times of crisis.

Law Firm Resilience in a Crisis: Part Four – People Resilience

Chris Bull, Jonathan Middleburgh, Leon Sacks and Yarman J. Vachha

The “Law Firm Resilience in a Crisis” series

Previous papers in this series have focused on Financial Resilience, Operational Resilience and Client and Commercial Resilience. In this paper we turn our focus to People Resilience. We look at People Resilience during lockdown, during transition out of the current crisis and finally we look at ‘new normal’ – i.e., what will make for a resilient workforce post-crisis.

People Resilience

Resilience during Lockdown

Firms are now several weeks into lockdown and many countries are looking at easing restrictions or have already started to ease restrictions. While lockdown is still in place, we would recommend that firms focus on the following:

  1. Staying close to your people
    There is a danger that employees will start to feel isolated as the lockdown continues. This applies equally to lawyers and to support staff. We are seeing some law firms keeping very close to their workforce so that their people feel highly supported during lockdown. Other law firms are not doing enough. Staying close to your people means checking in with them regularly; line managers should be checking in with their reports at least once a week. Contact should be maintained with furloughed staff, as well as with those working through the lockdown.
  2. Working on keeping up team morale
    The novelty of working from home is wearing thin, or wearing off, for many. It becomes harder to keep up team spirit the longer lockdown drags on. Some law firms are finding novel ways to keep up team spirit – virtual team drinks, virtual team coffee breaks, team or office quizzes, competitions, dress-up days, bake-offs etc. Regular scheduled team meetings and touch points are also crucial, to keep up morale as well as to establish a credible source of information in a period of rumours and “fake news.”
  3. Asking the right questions in your regular one-to-ones with team members
    In a normal operating environment, prior to the current crisis, much interaction will have taken place with your team members on a casual or impromptu basis. As this is now not possible it is more important than ever to have regular scheduled one-on-one meetings with your team members. Whilst it is inevitable that the focus of these meetings be on work matters, make sure that you additionally use your regular one to ones to find out what is going on with team members on a personal front. Team members face a range of challenges during lockdown: lockdown and isolation can be anxiety provoking; there are challenges around childcare and the difficulty of working parents home-schooling their children or otherwise looking after young children; people are experiencing the loss of loved ones or the passing of extended family, friends or acquaintances. Ask open questions to find out what is impacting your workforce, listen to what is going on and be supportive.

    Some things to listen out for:
    • Is the team member living on his or her own? Does he or she seem isolated?
    • Are you sensing that the team member is having difficulty coping?
    • Does the team member have some other vulnerability that you should know about?
    • Is the team member juggling childcare duties with a partner? If so, are both working and having to split childcare? Does the team member’s workload need to be altered to take account of this?
    • Is the team member a single parent who has full responsibility for home schooling or otherwise looking after a child or children? Does he / she have any support?
    • Has the team member experienced a bereavement? Have they lost close family or friends?
    • Does the team member have elderly parents who are in isolation? Are they local or at a distance? Does the team member have other vulnerable dependents?
    • Is the home-working environment and equipment suitable; is it helping, or hindering, your team member?

      Depending on the response to some of these questions, think about what additional support the firm might be able to give. Is it appropriate to offer to involve HR? Is that a necessity? Does your firm offer external counseling or other external support?
  4. Remembering that the support you show now will be remembered later
    This is a time to build loyalty – and equally a time your workforce will remember if you don’t show support. Few people are likely to be looking to move firms during the crisis but failing to show support now may well be reflected in attrition figures post-crisis.

Resilience during Transition

The transition out of lockdown will probably last for months. It is simply too early to accurately predict the duration or phasing, which will vary from country to country, and perhaps from region to region within a country.

Some firms may well take their eye off the ball during transition when it comes to staying close to their workforce. There will be a temptation to focus on the operational aspects of the transition and to ramp up business development to the exclusion or partial exclusion of focusing on your workforce.

Our recommendation is that law firms continue to do everything we’ve suggested above during the transition out of lockdown. Additionally, it is important to remember that any transition can be deeply unsettling, so keep a particular eye out for any dip in performance from any of your employees or for any of your employees who seem to be struggling to cope.

Firms will have to take a clear stance on what a responsible employer should be expecting and encouraging as lockdown gradually eases. Health authorities and governments are likely to continue to stress that where work can be done from home it should be, and we expect that white-collar industries such as legal services fall into this category. Law firms need to examine how best they demonstrate their responsibility for employees, clients and communities. It is possible that society will regard the firms who continue home working for an extended period as the most agile and well-managed corporate citizens.

For the many firms who have had to take decisive action on staff costs in response to the first phase of the crisis – including furloughs, pay cuts, reduced working weeks – unwinding these actions as the lockdown eases and government support is withdrawn is going to be one of the most difficult and risky management challenges of recent years. If the economy and workloads continue to be depressed, potentially long after lockdown ends, reversing these actions will be hard to justify financially. At the same time, there will be intense pressure to get people back to work. Redundancies and hard financial decisions are inevitably going to follow in some cases and steering firms through these choppy waters is a subject we will return to soon.

It is also our view that the workforce is at a point where its craving some good news and some direction as to what the firm will look like when the lockdown has ended – this gives some hope to the employees and something to look forward to. Psychologically it is the proverbial “light at the end of the tunnel”. It is key that management exudes positive messages about the future through its communications. We would re-iterate that the old adage of “communication, communication, communication” is vital at this time.

Resilience post lockdown – what’s going to be the ‘new normal’?

We have no doubt that in the short/medium term there will not be a full return to pre-crisis ‘normal’. Most law firm employees have experienced working from home full time for several months and have seen how it can be both effective and productive. Those firms that have previously resisted flexible working will find it much harder or impossible to do so, post crisis. It is inevitable, in our view, that the pre-crisis ‘normal’ will be replaced by a ‘new normal’ and that seems to be the assumption of many firms that we are speaking to.

As indicated above, we are firmly of the view that those firms that rapidly figure out and communicate a new working model will gain a competitive advantage in terms of attraction of talent and retention of talent.

Here are some provisional thoughts about what ‘new normal’ might look like:

  1. WFH is here to stay, to a great or less extent
    The genie is out of the bottle on home working. It will be hard to deny a reasonable measure of flexible working for those that request it post-crisis. Not everyone will want to work from home, but some undoubtedly will, and this will be hard to resist.

    We very much doubt that most firms will suddenly move to a predominantly home-working model. As pointed out above, the novelty of working from home is already wearing off for many employees. Human beings are social animals and require social contact to a greater or lesser extent. We think it is likely that a variety of agile working models will evolve, with working from home one or two days per week becoming common practice.
  2. Some employees will want to work mostly from home
    The savvy employer might be wise to accommodate some employees who want to work primarily from home. Some of the best lawyers might have individual reasons for working from a remote location – e.g., having a partner who has a job that ties them to that location. Those firms that are able to accommodate such employees, including new home-worker hires, will be more attractive employers and therefore better able to build a resilient workforce.
  3. The green agenda favours less office-based working
    There is an obvious environmental argument in favour of having more of your workforce spending a greater percentage of its time working from home. An environmentally aware workforce is likely to be attracted to an employer that allows people to spend a significant percentage of its time working at home, avoiding excessive commuting and reducing the high energy costs of surplus office accommodation.
  4. Video communications will need to become more professional
    Video meetings are likely to become increasingly the norm – at least for significant interactions. The new normal will seamlessly incorporate virtual/remote meeting attendees alongside in-person attendees. Firms have for many years spent large amounts of money upgrading their offices to look highly professional – and similarly spent large amounts of money on branding, websites, etc. It seems inevitable that video communication will become more professionalised – and that the days of employees presenting themselves to clients at a wonky angle in front of their kids’ nursery school art are probably numbered. We would suggest that law firms might need to invest in ensuring their employees have super-fast and reliable broadband at home, that they speak to clients using a green screen with firm-branded background, and that they are trained in how to conduct multi-party video meetings effectively.
  5. Flexible resourcing will continue to develop alongside flexible working
    One of the harshest business lessons of the 2020 crisis has been the dramatic speed at which some legal practice areas have stalled, leaving firms with an almost immediate mismatch between workload and resources/costs. Economic conditions suggest this disparity is now settling in for a long stay.

    Firms have, in some jurisdictions, been able to turn to government support to furlough staff in the short-term. Others have reached for cuts in pay and drawings, reduced working weeks and, sadly, lay-offs to deal with the rapid threat to profitability.

    In an era of contract-attorney companies, alternative legal-service providers, fee-sharing freelance-lawyer models and the gig economy, this cliff-edge experience is leading firms to reconsider a resourcing model that is so reliant on permanent, full-time employed staff, located in expensive city-center offices. We have heard most of the Big Four accountants announce their strategic switch to a more flexible resourcing model in recent years, able to cope much better with swings in demand and economic shock (or opportunity). Law firms now need to start to develop plans for similar changes.
  6. ‘New normal’ law firms will rethink how they occupy and configure office space
    There will inevitably be pressure, not least from the CFO or COO, to reduce office space. Such pressure will be unsurprising when offices are currently empty, and there is only a very gradual return to office working as we transition out of lockdown, and yet law firms are continuing to function and to service their clients.

    Retaining a resilient workforce in ‘new normal’ will require some smart thinking about the best configuration of office space. For sure, there is likely to be movement towards more open plan and unallocated (hot-desking) workspaces in firms that have previously resisted open plan working. But designing the ‘new normal’ office will require some serious thought about:
    • how much total office space is required for your workforce?
    • how much breakout space is required and in what configuration?
    • how do you configure your office, including all meeting rooms, if video communication becomes the norm in terms of client communication?
  7. Firms that forget that humans need physical interaction will lose out
    Some firms that we speak to are talking about conducting future partner meetings entirely remotely. Firms that have offices spread internationally are talking about the end of international travel. We would caution against attempting or expecting an extreme swing to entirely electronic communication. Humans are wired for physical interaction and video interaction is not the same as in-person chemistry, in particular when meeting people for the first time and developing a relationship. We believe that firms that rely purely on electronic communication will fare less well than firms that strike a balance between electronic and physical communication. In other contexts (e.g., interactions between world leaders) there have been vivid examples of how much can be achieved when people meet face to face. Law firms, in our view, will abandon physical interaction and connectivity at their peril.

Key Takeaways

  • Regular contact with your teams and individual team members is key and this should be cascaded through the entire organization
  • Psychological / professional support for employees who need assistance should be readily available
  • Management should communicate clearly on a regular basis
  • Management should be drawing up plans for the ‘new normal’ so that they can put these in motion once the governments ease restrictions
  • Consider how the new WFH plans will impact winning and transacting assignments from clients

This is the fourth in our series of perspectives on law firm resilience in times of crisis, all published within the last month. The three previous articles are still very recent and relevant to law firm leaders and can be found at https://www.edge.ai/category/articles/crisis-management-business-continuity-planning/ . The Edge International team would love to hear your comments and are ready to field questions about the people perspective or any of aspect of assuring law firm resilience in times of crisis. Our contact details are below. We will return to the subject of resilience in the context of crisis again over the coming months.

Law Firm Resilience in a Crisis: Part Three – Commercial and Client Resilience

Chris Bull, Leon Sacks and Yarman J. Vachha

The “Law Firm Resilience in a Crisis” series

This short paper is the third in our series addressing law firm responses to crisis. The underlying theme unifying all of these pieces is the need to balance fast-tracked, short-term decisions and actions with an emphasis on medium-term recovery and resilience. Having begun with an examination of financial resilience in part one, and then turned to operational resilience in part two, we are now focusing on commercial and client resilience.

All three pieces on Law Firm Resilience in a Crisis have been gathered together in one place on our website: You may wish to bookmark that tab for easy reference.

Commercial and Client Resilience

As the three Edge International authors of this paper are based in Europe, Asia and the Americas respectively, we aim to synthesise our experience and observations of different legal markets that are also at slightly different points in the evolving Covid-19 crisis. As with the previous papers, we wanted to foreground practical actions that law firm leaders can use in their firms. In this case we have posed and responded to ten core questions many firms are asking themselves as they grapple with a uniquely challenging crisis; we want the paper to serve as a quick self-assessment checklist. Our ten questions fall under three themes: client relationships, business development in a digital and virtual world, and commercial strategies.

Resilience and Client Relationships

1. How are you supporting your clients?

This will be one of multiple places where you read someone preach the message that, in times like these, you have to put clients first. But what does that mean in a practical sense? In our view, the critical challenge is that clients need to see how you are supporting them through what will be as tough a period – probably tougher – for many of them as it will be for you. The future loyalty of your clients as the economy recovers will be dependent on how you behaved during the crisis. That involves investigating and understanding the biggest issues and concerns your client has, and tailoring your communications, offers of assistance, updates and terms and conditions to those issues and concerns. They should be specific for your largest, most important clients and as tailored as you can make them to groups of clients in sectors, regions, etc. Your support might include some leeway on pricing, billing or collections, although that should obviously be carefully considered in the light of your own financial position.

2. Are you getting through to your clients?

The latest Covid-19 crisis has yielded a barrage of the kind of broadcasting updates and generic statements from a range of companies that we have become used to around any economic or legislative event (including, early on, a stream of bland reassurances that it was ‘business as usual at Firm X’) – except on an even bigger scale. This blizzard of ‘noise’ on social media and coming into Inboxes is impossible to navigate or consume. Your clients want, based on your insight gained from (1) above, personalized, tailored and value-adding communications. Calls are great and many clients are much easier to get hold of right now. Emails or messages should stand out, and personalization (i.e., coming from a name they know, not a corporate or marketing mailbox) is key to getting that done.

3. Which services and practices are you promoting?

For almost all firms, there needs to be a rapid re-prioritizing of which practice areas and services should be marketed and highlighted to clients. Within the space of a month, the markets have flipped; in many cases, that has meant a sudden drop in corporate and real estate transactions, a boom in interest in labour and restructuring law, a refocus onto different clauses in commercial contracts, and a spike in wills and estates work. The exact pattern differs between jurisdictions and firms. At the same time, corporate legal departments will be trying to keep their own teams busy, and restricting further the flow of certain types of work out to external counsel. The overall rule holds true, though: firms need to pivot to ensure clients are presented with the firm’s credentials in areas they may not have used in the past. Client-relationship partners will often need to communicate the services of practice areas they don’t work in and know less about. Cross-firm collaboration at this point is critical.

Resilient business development in a digital and virtual world

4. Have you rewritten your marketing and business development plan?

If not, you need to to so, and quickly. Much of the activity you had planned – events, networking, secondments, training programs – has been blown out of the water by lockdown. It will probably take a long time for this kind of ‘business as usual,’ in-person marketing to regain its full effectiveness, assuming it ever does. For many firms, you will be looking to cut costs for a period and marketing will be in your sights. However, cut too far and you risk competitors getting close to your clients and your firm becoming invisible at a critical time. We recommend that you review and rewrite the plan you had, probably reducing overall spending but re-prioritizing ruthlessly. Ensure those practices that are most buoyant in this economy get profile and are highly visible online and in your communications. Rank higher the investments of time and money that can provide a faster payback period and short-term return on investment. In particular, ensure that your digital impact is really effective – at a time when the only way for prospects and clients to stay informed is digital, you have to be at the top of your game.

5. What are your partners and lawyers doing with their time?

OK, in a crisis situation many senior lawyers will be very busy; their particular practice area may be booming, they may be covering for furloughed colleagues, they may be asked to step up as part of your emergency team. In the Covid-19 lockdown, most lawyers, however, are working from home and have reduced levels of new work, no travel time eating into their day and no in-person networking duties. We talked about personalized, regular contact with clients above, and that is where a chunk of this available time should be redeployed: video calls, ‘virtual coffees’ (or drinks, later in the day – we have seen some nice Zoom ‘home bar’ backgrounds!), quick check-in messages on social media. In addition, this is the time to fully engage your senior lawyers, some of whom haven’t really embraced or become comfortable online before now, in posting and sharing their insights on social platforms and in articles. Quality and tone are important; do ensure you have enough marketing resources to edit, coordinate and help promote these efforts.

6. Is your digital delivery of client services good enough?

For most firms in the current crisis digital delivery of legal services to clients will, by now, be in place and working. A few months back many law firms would not have responded ‘Yes’ if asked whether their interaction with clients was almost entirely digital but, right now (including via Zoom, Teams, WhatsApp et al), almost all would. However, clients will not be tolerant for lots of glitchy, taped-together digital processes; in their dealings with other professionals and service providers they will be exposed to some very slick models indeed. Soon, they will expect you to be just as good. And this is one thing extremely unlikely to revert when we return from lockdown – streamlined, painless, reliable and ideally paperless legal services will be a badge of a quality law firm. So, we suggest you continue to evolve and develop your digital services over the coming months. Do not assume you should scrape through to the time when you can get back to everyone in an office with piles of paper and clients happy to travel distances to come and visit.

7. How does a new client find you?

This is critical for private client work, but still a big factor for B2B services; in a world which is now even more reliant on internet searches, social media and online directories and recommendations, you need to be very certain how visible your firm is in these media. Does your online presence and Google ranking do justice to the quality and expertise of each of your practices – most especially those which you need to drive the firm’s performance over the next year? If not, this needs fixing; many firms will acknowledge that they haven’t paid as much attention to their search engine optimization (SEO), pay per click (PPC) and social media performance as they could have until now.

Commercial strategies for resilience

8. Do you have the commercial data you need to make quick decisions in a crisis?

This is a major area of research and development for us at Edge International, and we believe there is a case for most firms reviewing and overhauling their production of management information (MI) without the catalyst of a crisis. But a crisis certainly exacerbates this issue, especially one where we have such high levels of uncertainty, a very sudden stalling in key markets and the breakdown of in-person collaboration and supervision. Providing real-time information feeds to partners, team and department leaders and leadership are incredibly important, but also structured and packaged MI on a weekly, rather than the conventional monthly, frequency could be critical. We emphasized the need to track cash metrics obsessively in our first paper, but equally important is the tracking of pipeline and new activity: weekly trend reports that show how proposals/quotations, new matters and time recorded are progressing are critical to providing the firm with the lead indicators it needs to plan its next steps.

9. Do you need to provide free or discounted advice?

This is too big a question to answer in one paragraph of a short paper, but it is one that would definitely make the ‘Top 10 Most Frequently Asked Questions’ from law firm partners right now. Many existing clients and potential new clients have short, urgent questions in the current crisis; typically, these are about providing latest updates on government crisis support or on one legal issue, and sometimes they involve a bit of interpretation. Clients are often cash-strapped, laying off staff and cutting costs. So there is understandable pressure on lawyers to provide a quick piece of free-of-charge advice. This is easiest to justify in the case of loyal, ongoing clients who are continuing to provide instructions – it is a statement of support from the firm in return. For new clients, it could help lure in more substantive new work, but we encourage firms to find ways to link the provision of this initial advice beyond simple information updates to some commitment by the client. This could be in the form of a new advisory retainer service that will run through for a fixed period, with some initial free or discounted hours.

10. Should you ask for money upfront for new work?

Some readers will respond by saying ‘we already do’ and where you have managed to embed this practice universally, well done! For most firms, such requests are harder to achieve but we do believe it is a sensible practice to apply wherever you can in a crisis and recessionary period, where many clients face an uncertain immediate future and firms themselves need to manage their cash positions with great care. For existing clients, do ask them to pay outstanding invoices before you begin a new piece of work. And where you feel it is necessary to offer debtors deferrals or instalments of their outstanding invoices, do ensure you link this action specifically to your support for clients during this difficult period.

Our final checklist point brings us neatly back to the first question: How do you demonstrate that you are all about supporting your clients through this crisis? That is the right point to wrap up Part 3 of the series. We hope you have found this article valuable and that it gets used and shared in your firm.

We are really interested in hearing your thoughts and experiences, and we are ready to discuss other ways in which we can help in this challenging period. Do feel free to contact us – our details are below.

Law Firm Resilience in a Crisis: Part Two – Operational Resilience

Chris Bull, Leon Sacks and Yarman J. Vachha

In our paper of April 6, 2020, we introduced this series which is aimed at identifying and addressing topics that are at the top of the agenda for legal leaders during the current crisis. That paper was focused on Financial Resilience. In this paper we turn our focus to Operational Resilience.

Operational Resilience

Operational Resilience Priorities

While the financial impact of a crisis is what immediately grabs the attention, operational adjustments are essential for business continuity and to compete in the new market reality. By “operations,” we mean the organization and support of the workforce to serve internal and external client needs effectively.

The top priority is to ensure that workflows and business processes are not interrupted. Where disruption cannot be avoided, leadership needs to adapt previous processes rapidly and definitively to meet the challenge; we have recently seen this in practice in firms which moved quickly to an entirely virtual and digital operating model.

The second priority is to provide the means and resources to operate efficiently during the crisis. The ranking of executive-agenda issues and items of expenditure will almost certainly need to shift for the duration of the crisis and possibly beyond.

Considering how operations should be restructured to serve the market post-crisis, and planning the investments necessary, is the third goal. These are key to sustained operational resilience.

The goals are achieved through:

  • Effective and proactive leadership and streamlined decision-making processes
  • Supporting mechanisms for people
  • Robust communications – more regular, transparent
  • Adapting infrastructure and allocation of resources
  • Embracing change with a positive attitude

We elaborate below on five actions that can enable achievement of these goals.

Crisis management team

  • Put in place a process for strong and decisive leadership that can set priorities for the organization and take calculated decisions based on information available.
  • Assemble a multidisciplinary team of experts (e.g., from Finance, Technology, Operations, Human Resources, Communications) that “meet” more regularly and both provide strong direction and respond very rapidly to developing events and emerging information (the “Crisis Management Team” or “Response Team”).
  • Unlike normal circumstances, it is not possible to gather all facts to make a pondered decision in a crisis. The uncertainties do not allow this to occur in an adequate time frame. Certain risks are inevitable to avoid the greater risk of inaction.
  • It is incumbent on senior leadership to break from a decision-making model based around iterative consultation and reporting and delegate authority for an accelerated response where appropriate.

Supporting mechanisms

  • The safety of your people, both physically and psychologically, is not just a moral responsibility but a key to maintaining stability and productivity. Furthermore, people need assistance and tools to be able to adapt to new realities.
  • Provide guidance in a simple straightforward format as to how people can maintain their well-being and continue to perform their functions, especially working remotely and connecting virtually with clients. Issue a list of “go to” people for different subject areas, with their contact details.
  • Establish an on-line information hub, or resource centre, including FAQs. This is a repository for the orientation, resources and materials (e.g., “how to” and “what to” questions) that people may consult at any time. These FAQs must be regularly updated to respond to the changing nature of the crisis and how it is being managed.
  • Engage with clients to understand their concerns, how they may be supported and how the firm is capacitated to continue serving them during the crisis. (We will comment more on client relationships in Part 3 of this series.)
  • Support the best possible performance that can be expected of professionals in the changed scenario (may vary significantly by practice group) and do not insist on pre-crisis goals that may no longer be attainable (e.g., billable hours, fee targets); doing so will always undermine leadership’s credibility amongst professionals. Also, provide orientation on how best to use any “down time” (e.g., on-line training, updating precedents, reconnecting with previous clients and contacts, etc).

Communications

  • Communication is leadership’s strongest tool to build confidence and morale and, as a result, assure collaboration across the organization and with clients and other stakeholders.
  • Create a plan and stick with it. Communications need to be frequent and consistent, and must address questions and concerns of the audience. Transparency and setting the right tone are key to effective communications; after all, the objective is not only to inform but also to calm fears, generate confidence and sustain morale.

Staffing needs

  • Redeploy and make the best use of talent. While rightsizing may be necessary, and we indicated in Part One how cutting of staff needs to be strategic, do not over-prune so that you prejudice the ability to gear up post-crisis. Look for the opportunity to reallocate staff from a practice area with depleted business to one that is busier.
  • Similar to reviewing practice-area loads, evaluate geographic spread (where appropriate) and how offices and groups might best share resources or work on a more integrated basis.
  • Consider the overall legal staffing mix and opportunities to delegate aggressively to maintain productivity while, of course, assuring that service quality will not suffer.
  • Take advantage of the crisis to rethink support-staff needs. This is not only a question of quantities and types/level of experience but also an opportunity to present challenges to promising talent.

Infrastructure and supply chain

  • Take the necessary steps (which will depend on the level of preparedness) to enable fluent remote working capability, empowering the technology experts to engage with outside vendors for the essential, appropriate solutions (devices, internet connectivity, collaborative platforms).
  • While moving quickly to assure business continuity, there should be enough oversight to determine that key risks such as security of data, business interruption through loss of internet connectivity and compliance with data privacy requirements are managed. This could well entail obtaining a second opinion on the capability of systems and applications to be adopted.
  • Develop practical training sessions and resources to enable the use of new technologies and educate all users. Now is the time to focus on providing assistance and tools and not just on procedural matters.
  • Engage with suppliers and determine how best to modify service delivery and service terms. Remember that these entities are facing their own challenges and will be keen to either maintain business or promote opportunities.
  • Apart from technology service providers, pay attention to logistics (e.g., physical delivery of documents and materials to a more distributed population, travel arrangements) and consider outsourcing options, even if interim, to eliminate bottlenecks.

The Bottom Line

During a crisis period, do utilize the power of the “team” and coherent engagement with all stakeholders (workforce, clients, suppliers). Do not expect the processes, priorities, performance metrics or governance solutions that worked just weeks before, pre-crisis, to see you through this new normal; be agile and prepared to adapt very rapidly across your business.

Whilst responding smartly to the immediate demands of the crisis, never lose sight of your – now altered – roadmap; ensure you consider how to restructure and invest for tomorrow.

Law Firm Resilience in a Crisis: Part One – Financial Resilience

Chris Bull, Leon Sacks and Yarman J. Vachha

Introduction to the “Law Firm Resilience in a Crisis” series

It hasn’t taken long for the statement that we live in unprecedented times to become a universal cliché – Covid-19 and the resulting financial crisis is impacting all businesses far and wide and it will certainly get worse before it gets better.

As consultants who work in the legal industry, located in multiple countries and continents and already building up a stock of real-life, often hands-on, experience of this uniquely challenging period, the Edge International team have an opportunity to observe, compare and consolidate what we see across the legal world.

Our “Law Firm Resilience in a Crisis” series of papers is the evolving output of that process. We have identified a number of topics that are at the top of the crisis agenda for legal leaders and will report on these, one-by-one, weekly from early April. We may well revisit some of the topics, as the crisis and recession develop and as we start to gauge the effect of different strategies. Part One focuses on Financial Resilience.

Edge International colleagues have also kicked-off a companion thread on “Remote Working” in the legal industry, and we will regularly cross-refer between these streams.

Financial Resilience

Financial Resilience in Context

Financial actions, even in the midst of such a fast-moving and impossible-to-predict crisis, should not be taken in isolation. There is a serious risk that apparently obvious corrective action on the financial dimension can have damaging consequences in other areas of the business, undermining confidence or the firm’s ability to compete or recover. Financial decisions need to be made more quickly than perhaps at any previous time in your firm’s history, but they need to be made in context and in line with a clear strategy and direction.

The need of the hour is strong and decisive leadership. Leaders need a “laser-like focus” on the direction they wish to set, and a clear strategy to navigate these troubled waters. The current situation is akin to being at war and leaders need to assemble a small group of experts that can provide strong direction and respond very rapidly to developing events and emerging information. In the current environment, the law firm cannot be run by consensus as it would in normal circumstances.

The key is not to panic, be resilient and rest assured in the knowledge that we can get through this. When we emerge from these troubled times the world will be different, generating new opportunities – many of which we cannot foresee at the moment. Whilst it may not seem to be the right time to be thinking about the future, the actions taken during this period will determine your future. So be Bold!

Business Continuity Planning

A word about business continuity planning. We will return to this topic in upcoming papers, but it has been a massive focus for many of you over recent weeks, and it would be wrong to dive into any discussion of resilience without addressing a few points on business continuity.

Many firms have probably thought about creating a business continuity plan (BCP), or reviewing and testing a dusty old BCP, in the recent past and have put it off in the “too difficult” box. Well, guess what? It’s here now and unfortunately many businesses are ill-prepared for the crisis we are enduring. If there is a lesson that can be learned from this unfortunate situation it is that a good, up-to-date BCP is like your most fundamental insurance policy and a must in all businesses.

Once the crisis is over, and before the next one emerges (and there will be a next one), we would urge you all to get the necessary expert advice and put in place a BCP suitable for your firm. As importantly, now is not the time to neatly pack away your BCP, thinking that it is only there for dealing with an immediate, very short-term and short-lived moment of crisis. A good BCP will help guide you through the next three to six months; your business continuity will be tested and could be permanently damaged as we move forward into the next stage of the crisis.

If there are three BCP learnings that we can take away from what we have seen already, we would highlight the following – each of which has a financial implication:

  • All-round IT robustness, especially Internet connectivity, accessibility and bandwidth (in all your home and remote working locations and not just in your offices), is key to legal businesses in the 2020s.
  • Laptops and remote working access on other devices for all staff is the new norm. The cost of this is far less than the cost of the disruption to your business. The best-managed firms had it in place already, the next best were able to roll it out quickly; but many others are still struggling to get the whole firm connected and working as well as they did in the office.
  • The job now is to develop, enhance and fix the bugs in that hastily assembled remote connectivity; that will continue to exercise minds and stimulate innovative responses through April, May and into the summer. Without going crazy buying every remote working tool you ever heard of, this effort will rightly be a spending priority amidst a period of cost-cutting.

Financial Resilience Priorities

At this time, firms have to refocus their financial objectives and priorities. Resilience is the key. Pulling the firm through the immediate lock-down, economic crash and wildly fluctuating uncertainty is the first financial resilience goal. Reshaping the firm’s financials for the recession that has already begun is the second goal. Preparing the firm to recover as quickly as possible and thrive as conditions begin to improve is the third. These goals are achieved through:

  • Protecting cashflows
  • Managing costs
  • Coordinating financial strategy with staff, clients and banks
  • Building confidence and morale
  • Looking for opportunity and embracing change; restructuring the business for the recovery, whenever it comes, and for the post-crisis future

We outline below some very basic steps in building financial resilience in these times.

Monitor Cashflow Daily

  • “Cash is King” – This saying is true at all times, but especially in our current situation.
  • Establish what your existing cash balances are.
  • Create a detailed daily cash report to monitor the movements of cash in and out of your cheque and savings accounts. Don’t forget to include credit and debit cards.
  • Add to the daily cash report all known inflows and outflows of cash on a weekly basis for the next four to eight weeks. Install a clearly communicated policy of ‘no surprises’ and insist that the central finance team is aware of all potential outgoings.
  • This gives you a picture of your immediate cash needs for the very short-term future, particularly direct outlays (e.g., rent, partner draws, wages, supplies, etc.).
  • All discretionary costs should be frozen until you can assess the situation and decide the costs are relevant to the current situation in your jurisdiction.
  • The daily cash report does not need to be perfect, It is just a document to assist you in managing cash – with a wide-ranging diagnosis of the health of the cash in the business.

Bill, Accelerate Cash Collection and Accounts Receivable

  • Professionals are generally reluctant to talk with their clients about fees, billing and collections. In times like these it is much more difficult.
  • Now is not time to be shy. The survival and health of your business is based on the amount of cash you collect and the speed with which you collect it, so pick up the phone and ask for amounts due to you to be paid. A phone call is far more powerful than an email; it is “personal”, you can empathise with the client and strike a deal with them.
  • Invoice for everything that you can bill for. Remember, your bills today are the source of cash flow in a few weeks’ time. If you don’t invoice, you cannot attempt to collect in a few weeks.
  • You may consider doing deals in terms of discounts or instalment payments, or defer part of the outstanding fees; indeed, these steps may be essential to achieve any cash collection from some clients in financial difficulty. The key right now is to maximise your cash.
  • On future deals, if you can get paid partially upfront you should consider this. When taking on new work, insist that already outstanding bills are paid before you begin work.

Manage your costs

  • This may seem a very obvious statement, but costs should not be cut indiscriminately – there should be a strategy in place.
  • Direct costs such as rent and staff costs cannot be cut easily, but there should be a strategy for this – perhaps a rental reduction agreed with, or deferment from, the landlord. Consider re-negotiating a new long-term lease with the landlord. Consider also cutting or deferring staff salaries and partner draws. This will focus the mind of partners that cash is vital and will put more urgency behind the cash collection effort.
  • Freeze hiring. Use redeployment and share underutilized resources between teams and departments to address gaps.
  • Consider the “Pyramid cut” if job cuts or furloughs are required. Look at your organisation structure as a pyramid, so when you shrink the organisation you cut a portion of each level equally; e.g., the business to shrink by 20% top to bottom. If the leverage in your pyramid is not competitive, consider adjusting it at this time. It is no use just cutting trainees and support staff as this will not be effective and the cost saved may not be significant enough. Remember that business will come back in time, and in the short term you will be scrapping for as big a share of a shrinking market as possible, so be strategic in what you cut by keeping an eye to the future.
  • Now is the time to seriously consider addressing your non-performing businesses lines, lawyers, support staff and part-timers that do not add to the business in this crisis. Areas and roles that you were struggling to entirely justify pre-crisis cannot be ‘carried’ through this period without damaging your firm. This needs to be done strategically with an eye to what business may come back at the end of this critical period.
  • It is important that the people that are retained are paid fairly as you need to maintain morale, especially when people are isolated and working remotely.
  • Variable and discretionary costs should be assessed and anything which is not required (i.e. “nice to have”) should be frozen or cut. Identify your biggest suppliers and have a conversation with each one about reductions in service or cost or deferred payment terms.
  • Close your premises if you are not using them, paying close attention to ensuring that running costs do not continue. If you have upcoming real estate lease breaks, this may be the time to decide to cut your square footage. Most law firms are already sitting on office space that is poorly utilized – especially those still working in cellular layout – and every prediction about the world post-2020 suggests there will be a dramatically reduced need for as much white-collar office space. Make your move now if you can.
  • Do not cut your business development costs drastically; this is a mistake made by many organisations, as it’s an easy target. This category is distinct from general firm marketing and brand promotion, the “business as usual” activity which will not cut through in this climate. The investment in BD should be very focused and tailored on specific topics which are on top of clients’ minds currently, and on the practice areas where there is the best chance of winning new business and improving market share. Most importantly, all non-digital BD and marketing spend (e.g., events, face-to-face networking, travel) can, of course, be frozen in the short to medium term.

Build Your Cash Reserves & Credit Lines

  • Building a cash reserve is now more important than ever. In an ideal situation you should have sufficient cash in the bank to survive four to six months based on your reduced cost structures.
  • If you are entering this uniquely challenging period with low or no cash reserves, your focus should be on managing your finances to maintain your cash position, and not to allow bank debt to spiral. Your target is to avoid cumulative months of net negative cashflow, and plan to achieve net positive flows as fast as you can when there are signs of improvement. This may be the time to consider partner capital calls in order to address a structural imbalance between borrowing and equity.
  • Remember that you may need to build redundancy costs into your estimations. In general, most significant cost reduction actions will have a lag time before cash outgoings reduce (examples are notice periods and dilapidations on real estate).
  • Speak to your banks and get a credit line (revolving overdraft/credit facility); if you can, avoid term loans that you have to service every month, as this creates cashflow pressure.
  • Many governments are providing support to businesses and employees, especially to SMEs; tap into these as much as you can, especially where employee-support packages allow you to furlough but retain staff on payroll and governments are supporting low-interest bank lending.
  • Once you secure the credit line/government aid, use these as the principal sources of cash as the interest on this financing is cheap. Keep any actual cash reserves as intact as possible as your reserve fund for when you have no further credit sources to turn to.

Forecast & Budget

  • Reassess your budget for the year by doing a rigorous profit and cash forecast. This should be reassessed monthly until the end of the year.
  • Be clear with staff about 2020 financial year targets: in a period of extreme uncertainty and with gaps appearing in your fee-earning resources, now is not the time to be rigidly insisting that personal or team targets, set in a different world, are met. How do you re-set realistic, achievable objectives? Be seen to support the achievement of the best possible performance, not trying to drive it from ‘the top’.
  • The budget for the following financial year should be prepared with an eye to recovery.
  • Ensure managers and partners understand that all expenditure budgets are effectively ‘unbudgeted spend’ and require additional, just-in-time review and approval. Prioritize spending requests rigorously and request clear return on investment and payback period assessments. This is the time to put some extra priority on actions that will bring in work or improve cashflow in the short term.

Six Takeaways

  • Don’t panic: You can get through this. The legal industry, and your firm, has faced major crises and recessionary periods before, and will again.
  • React logically with a strategy. Do not “knee jerk” or “react emotionally”
  • Lead from the front: Communicate, Communicate, Communicate
  • Plan for the future. The way we do business currently will not be the way of the future. Invest in technology and ensure you build financial resilience in the business for the future. Rethink the shape and scale of each of your practice areas, sectors and geographical locations: the next few years will not look like the last few years.
  • Invest in and have a robust IT infrastructure and BCP for future crises. The future of legal practice was already digital and that future is now here; eliminate paper, wet signatures and actions that rely solely on face-to-face interaction.
  • Most importantly focus on how you can service your clients through this difficult time and how your actions help you to retain or gain a well-earned “seat at the table” as their trusted advisor.

Alternative Growth Structures

Chris Bull

We are in a period of genuinely unprecedented change in the legal market. Deep-seated structural changes have been ignited by a combination of economic downturn and deregulation, creating a constellation of different structures and models for providing legal services where once stood the near-universal model of a partnership of professionals.