Preparing for the Future Today
The COVID-19 pandemic and subsequent gubernatorial orders requiring business and government to stay at home forced firms to rush to make changes. Lawyers got very creative quickly. They held parking lot real estate closings. Wills were witnessed through a window. Courts held hearings via video conferencing. As we shift through reopening stages and look forward toward potential additional restrictions caused by new waves of the coronavirus infection, firms should review plans, policies, and insurance coverage to prepare now for the future.
Policies
It is likely that your firm had to review and update your policies in the wake of the pandemic. Policies such as Sick/Paid Leave, Work Hours, Remote Access, Internet Use Policy and Security Policies need to be visible and up to date. A quarterly review of your firm’s policies, with an eye towards any change in the law, should be established. EEOC, ADA, FMLA, OSHA and other regulatory guidelines may have changed or reinterpreted considering the pandemic.
Policies that your firm may have developed or reviewed in response to the sudden change include work from home, extended sick leave policy, travel policy, and a reimbursement policy. During your policy review in advance of, or during the pandemic, inadequacies or restrictions that would have made sense pre-pandemic may need to be aligned with adjusted standards. For instance, your remote work policy may need to be revised regarding any restrictions regarding “distractions” like children or caregiving responsibilities. While those may have been appropriate in the past, in a shelter-in-place environment, employees will have little choice. Additional policy rules requiring a specific area to do work from, such as a home office, may also need to be waived if the firm is reacting as part of a business continuity plan that includes pandemic response.
Other policies and guidelines that your firm may now have in place include privacy issues. How do you handle inquiring about the health of employees and visitors to the firm? It is important to stress that sick employees should feel comfortable calling in sick and not coming into work to avoid potentially infecting people. Let them know how to reduce the spread of the virus through sanitizing, what measures the office is taking to keep staff and clients safe, and what the firm plans to do in the event of further community quarantine, containment or socially responsible isolation. If you have employer-issued health care plans, let your team know who to contact with questions about coverage.
Business Continuity Plans
Did your firm’s business continuity plan consider a pandemic? Does it now? Law firms should have a business continuity plan in place. While there are distinctions between a disaster recovery plan and a business continuity plan, the firm’s plan should identify potential business disruptions and how to mitigate them. A good plan will have a workflow and response decision tree so that the firm can quickly assess when and how to act. A business continuity plan should contemplate disasters including fire, flood, natural disasters including pandemic, as well as data breach, data loss, and any disruption that creates a situation where the firm’s business operations are impacted. Review your existing plan, update as necessary and test your plan.
Succession Planning
In the face of a pandemic, firms should also check their succession plans. Many people rushed to law firms to update their wills, establish powers of attorney, and create medical directives. However, some law firms have little documentation or preparation in the event of the firm’s sole owner becoming incapacitated. The firm should review or create a succession plan to protect the interests of clients, as well as employee attorneys and staff. In some circumstances, it may be time to implement a partnership, PLLC or other business entity to protect the firm if the business owner suddenly dies. Make sure there is a protocol to collect information to identify and notify clients, and steps are taken to return any outstanding trust money and help clients find alternate representation.
Financial Preparedness
Over the course of several years a firm should be able to forecast trends and plan accordingly. Economic ups and downs are nothing new, though an overnight stagnation of the global economy is hard to predict. Many firms made quick and unpleasant decisions at the beginning of the COVID-19 pandemic, including layoffs and partner/associate pay reductions. However, economists had been warning of a recession to come for months, though certainly not on the scale of the effects of a nearly global shelter-in-place rule. Firms that do a weekly review of financials including profit/loss statement, the balance sheet, cashflow, and retained earnings reports will be able to trend spot and anticipate needed changes.
Does your firm have a good relationship with its bank? When the CARES Act unrolled loans through the Paycheck Protection Program they were administered by the banks. Having a good relationship with your bank can ensure you get the help and attention you need and get your questions answered. It can also help if you need to get an extended line of credit or small business loan. Your firm’s budget and financial reports can also be of help if you need to request a loan, as well as ready access to tax returns so there is not a delay while you collect the necessary paperwork. Organized record keeping of print and electronic financial documents should be a priority.
Insurance
At the height of the shutdown, businesses scoured their insurance policies to see if they had some recourse. If they had a business interruption policy, they found that pandemics were often written as an exclusion. Firms in regions prone to floods, fires, tornadoes, and hurricanes have already explored appropriate insurance to cover potential losses. It is time to review your policy, this time inquiring about opportunities to add additional coverage for business disruption due to forced closure of offices by government mandate and other effects of a pandemic.
In times of economic upheaval, most malpractice insurers see a rise in claims. Law firms should keep a heightened awareness of what triggers claims to avoid future problems. Firms that have hastily adopted new practice areas should be mindful that they may lack the expertise necessary to do the work without significant diligence. Firms should review their engagement letter and fee agreements for clarity and define scope of work. With dockets in a state of fluctuation, special attention should be paid to checking and double-checking that deadlines are calendared correctly. Communicate early and often with clients on the status of their matter. Do not wait for the client to ask for information, and make sure they are kept in the loop. With heightened anxiety abounding, clients will need special care and attention. Do not let voicemails and emails go unanswered. Create a system to ensure clients feel like you are on top of their matter, even if circumstances make it difficult to move forward with the courts. Finally, stay on top of collections. Fee disputes often end in countersuits. Get your bills out on a regular schedule and follow up immediately on unpaid invoices.
Does your firm have a cyber-liability insurance policy? Bad actors take disruption as an opportunity to leverage vulnerability and attack for profit. Cyber liability insurance covers the cost for a business to recover from a data breach, virus, or other cyberattack. It also covers legal claims resulting from the breach. Any business that stores sensitive data in the cloud or on an electronic device should have cyber liability insurance. Some malpractice insurance providers are offering cyber-liability coverage, or your business insurance provider may offer additional policy options. If you get cyber-liability coverage, make sure to carefully read and understand the policy to make sure it adequately covers potential scenarios. Also be aware of what may void the coverage. Does the policy require that the firm’s data be encrypted in storage? In transit? Be aware of your policy exclusions and make sure to adopt protections, so that the claim is not denied due to a failure to properly protect firm data. If that protection is “industry standard,” you will need to press to make sure you get specifics.
Wellness
The COVID-19 pandemic added unprecedented stress to an already stressed profession. Many firms formalized and encouraged wellness strategies and techniques. Desk yoga, guided meditation, mindfulness seminars, and stress-relieving activities were rolled out at firms to try to combat the anxiety, depression, and loneliness that were amplified by the pandemic and the stay-at-home orders. To serve the needs of firms and solos, bar associations and lawyer assistance programs made even more programming and resources available. While the pandemic served to heighten the awareness that lawyers need to proactively seek assistance, the problems with lawyer’s substance abuse, stress, and depression are not new and are not going to disappear. Firms that focused on implementing wellness training and techniques should not stop. Those lawyers who did not start should seek wellness resources and make it part of their daily habits.
Conclusion
The COVID-19 pandemic forced many changes for law firm’s business. Firms acted quickly to keep their teams safe and continue providing legal services as best as they could. Given some opportunity to reflect, firms should prepare for future contingencies and review plans in light of the new realities the pandemic has presented.
Catherine Sanders Reach is director of the NCBA Center for Practice Management.
This article is part of the August 2020 issue of North Carolina Lawyer. Access a curated view of NC Lawyer or view the table of contents.