Ride the Lightning

How is BigLaw Responding to the Dual Crises of COVID-19 and the Economy?

April 13, 2020

As Bloomberg Law reported in early April, large law firms are swiftly taking action in anticipation of a possible extended economic crisis and a possible extension of stay-at-home orders.

The post described measures already taken and some measures planned for, including layoffs, furloughs, freezes in partner payouts and cuts in pay. Unlike some other businesses, when law firms run out of cash, they generally do not have other assets to fall back on. When the cash is gone, it's over. Firms are deferring capital expenditures and even deferring payment of 2019 distributions that are still unpaid. Some are looking at reduced work weeks at lesser pay. If they have pensions and other long-term obligations – well, they are studying their options.

In the DC area, we have seen law firms making 30-day, 60-day, 90-day and 120-day contingency plans. Why? No one knows when the COVID-19 nightmare will be over – nor can we predict with accuracy what will happen to the economy. And everyone remembers the painful lessons of The Great Recession – we don't want to repeat the mistakes we made then.

Needless to say, there are a lot of lawyers, many of whom are financially over-extended or saddled with law school debts, who are suffering acute anxiety over the possibility of pay cuts or, worse, layoffs. Solo and small firms are worried about their survival. Some lawyers report that they are beset by constant angst.

As we have learned to our dismay, relatively few solo and small firms had adequate business continuity plans. To the extent that lawyers in such firms are suffering from a decline in revenues, it might be wise to work on a comprehensive business continuity plan – and, as my good friend and frequent co-presenter attorney Lucian Pera suggested, it's also time to start planning for what may be a slow, staged re-opening of law firms. As I confessed to him, we've been so overwhelmed by responding to the immediate needs caused by recent events that we hadn't given thought to the need for planning to open law firm doors again. I recommend taking Lucian's excellent advice.

My Japanese husband tells me that there is an old Japanese proverb which says: "Fall seven times, stand up eight." May we all emerge standing.

Sharon D. Nelson, Esq., President, Sensei Enterprises, Inc.
3975 University Drive, Suite 225|Fairfax, VA 22030
Email: Phone: 703-359-0700
Digital Forensics/Cybersecurity/Information Technology
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