Consider these headlines from the ABA Journal:
- Roughly 81% of law firms have seen their revenues drop during the COVID-19 pandemic
- 27% of firms experiencing loss of revenues saw business decline by more than half
- Nearly 20% of firms have been forced to shrink their staffs
- More than 60% said they believe it will take from four months to a year for their firms to revert back to their financial positions before COVID-19
- Demand for the first five months of the year was down only 1.4%
- Cash collections were up more than 3% through May
- Expenses were essentially flat as law firms reduced discretionary spending
- 54% of the law firms reported increases in client requests for discounts in May, compared to the previous month
- 52% reported more requests for extensions the same month
- Lawyer layoffs have been modest
- Layoffs of nonlegal staff members have been concentrated in jobs that don’t lend themselves to remote work
- Transactional practices, such as corporate and real estate, were most affected by the slowdown
- Practices have been active in bankruptcy, banking, labor, and employment
- Liquidity is good, with almost 90% of law firms having the ability to cover at least three months of monthly expenses, excluding partner draws
- More than 50% of the surveyed law firms cut or delayed partner contributions, which gave them more cash on hand
So… which is it?
Good question! There’s a difference between a nosedive and faring surprisingly well, although the devil is in the details.
The top law firm data is based on a survey of 52 of the nation’s top 100 grossing law firms and 20 midsized and regional law firms. Such a list would include very few, if any, offices with a presence in Oregon.
Additionally, the data was gathered four to five months ago. Measured in COVID time, which eerily resembles dog years, the survey feels outdated. Notice too that the firms judged to be “doing well” nonetheless laid off staff and reduced spending. Half received requests from clients asking for discounts and extensions, which were no doubt granted.
Either way we know our truth. Oregon is a state largely comprised of small firms and solo practitioners – lawyers who make a living but aren’t among the nation’s top money-wise.
So as we work to restore our livelihoods and practices, what should we keep in mind?
Five thoughts to keep in your head
- We can and will bounce back.
- Continue following COVID guidelines and don’t let your guard down. Staying healthy ensures that your practice remains open.
- Deal in facts. Know the economic indicators for your firm.
- If you have been neglecting marketing, you absolutely, positively must get going.
- Make a plan and take action. Now might be the time to consider other practice areas.
What to do next
Work on your mental mindset
You are more resilient than you think.
Consider the tough times you’ve lived through. Losing someone you loved, struggling over student loan debt, or ending a relationship. It felt bad at the time, and I am not minimizing how bad. However, you did survive. You are here. You moved forward.
Furthermore, I am willing to wager that you had help. Someone supported you. Said something or did something that made you feel better. Reach out to those people today. Reach out to the attorney counselors at the OAAP for free, confidential assistance.
Your physical health
If you don’t take care of yourself, you won’t be able to help others.
You know what to do to stay physically healthy, so you won’t see it repeated here. Mental health is another matter. If you are struggling, pick up the phone and call the OAAP. They can help.
Just the facts mam
What are your outstanding accounts receivable? How many clients are 60 or more days overdue? When did you last compare your actual income and expenses against budgeted projections? Do you have a budget?
Financial management may not be fun, but we have to deal in reality. You can’t guess who owes you what or how much, you’ve got to know. Start now.
Begin by adjusting or creating a budget for the remainder of 2020. Yes, I know we only have four months remaining in the current year, so this is a task you could easily procrastinate about. Don’t do it. Face the numbers now while time remains to make a plan and take action.
On the expense side, ask for no-penalty extensions, negotiate new rates, request discounts, and get tough on discretionary spending. You may need to collect retainers for litigation expenses you previously fronted.
On the income side, get on top of overdue accounts. I’ve said it before: the most effective thing you can do is pick up the phone and talk to your clients. Screw up your courage and do it. Accepting monthly payments or a discounted amount due is better than no money at all. Offer contactless payment through your website or Square account, accept Zelle or Venmo. Be flexible. Find out what works best for clients.
I devoted the month of July to marketing tactics centered around the new normal of COVID-19. If you didn’t catch those posts, or need a refresher, access my blog archives from July. From the home page, locate the sidebar on the right portion of your screen. The archives are midway down the page.
Make a plan
You are in control. Make a written list of what you will do differently, starting today and in the future. Be specific and lay out next steps. For example:
- Read up on COVID and marketing. Identify 5 or more ideas you want to pursue. Set timelines for each and execute your plan.
- Prepare a budget-to-actual comparison. Identify what you need to adjust, and act accordingly.
- Review accounts receivable. Decide on a strategy for each overdue client and begin making calls.
Commit by scheduling out each planned activity. Allow adequate time to get tasks done and don’t overcrowd your calendar.
Scheduling isn’t busy work. It protects your intentions to follow through on your plan and increases the likelihood you won’t brush tasks off.
If you really want to ensure success, find an accountability buddy. Another lawyer is nice, but not necessary. Anyone who is willing to partner with you in goal setting will work. The purpose is not to critique, but to incentivize you to follow through because you’re answering to someone other than yourself.
Once you have a buddy, schedule weekly phone appointments. You won’t be sharing confidential client information. This is a “how did you do this week?” type of conversation and it doesn’t have to be a major time suck. If you want the exchange to go a bit deeper, obviously it can. You can ask for feedback and offer suggestions. It’s up to you.
All Rights Reserved 2020 Beverly Michaelis