So, the starter’s gun has fired. We now know the rough framework for the route back to more normal levels of trading. Things are likely to move fast. How can you now prepare? I have written previously with some major areas to consider: https://hunningsconsultancy.co.uk/coming-out-of-the-covid-19-lockdown-some-practical-steps/ . I would like to explore some more practical steps.
Yesterday (12th May) the Chancellor announced that the furlough scheme would be extended to the end of October. It would run as it is now to the end of July. Then it would be modified (details to be released by the end of May) but from August he would expect employers to share with the state the burden of the cost of the scheme. I suspect that is when the financial squeeze will start to bite.
What does that mean?
That’s 11 weeks. At present the furloughed staff have 80% of their wages paid by the state with employers making up the remaining 20% from their reserves or income. From August the government expects employers to share the cost. What does that mean? Here’s a possible scenario: the state will pay 60% in August with a taper down to 0% by the end of October. I don’t think that is unrealistic. They have a duty to protect and manage tax payers’ money as well. If the employer is having to fund 40%, and rising, of the wages of staff then they will want some productivity from them. This is exactly what the government wants – to ease people back to work. But will there be sufficient work for them to do? Will they be able to work remotely or in the office with the appropriate PPE, social distancing and transport? There needs to be some serious planning and with that careful evaluation of your business. The extension of the furlough scheme to the end of October is clear recognition that the current conditions are a long-term reality. So, firms who went into hibernation hoping that this would pass quickly will now need to start to adapt to the new working environment.
Will there be enough work?
If you relied on clients walking in through the door your world has changed dramatically. Even if not the ‘norms’ of before have shifted. New work is much more likely now to be found through relationships and on-line routes. I would strongly advise you to:
Doing the work
Here is a link to the latest government plan to recovery issues 13th May 2020: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/884688/Our_Plan_to_Rebuild_The_UK_Government_s_COVID-19_recovery_strategy__large_print_version_.pdf Page 56 is the start of what they write about returning to work. Each of you will need to work out what you will need to do for your business. Please feel free to contact us to talk things through. [email protected] or 07887 524507. If there is a new wave of people returning to work in August, then there may be a new wave of people who need to be fitted up for remote working. You will need to advance plan for that – equipment, training, bringing them up to speed on new working methods. (If you don’t have IT support, we can recommend some we use and trust.)
Many law firms have put on hold plans to move to cloud-based case management systems because staff are on furlough. Now may well be the time to move forward with these projects so they can hit the ground running with the new technology. The new systems should also bring efficiencies which either allow you to do more work more cheaply and more flexibly – or on the flipside with less staff. We can advise and assist with the implementation and training, put you in touch with people who can advise on the HR side of things and also advise and assist with review of your current processes to see where efficiencies can be achieved. If you change your policies and procedures your OPM (Office Procedures Manual) and other compliance documents might need a revision. Certainly, with regard to social distancing and PPE, flexible working, protecting client data out of the office etc.
Financing the changes
First thing to say – I’m not an accountant, so take proper financial advice. However, here are some thoughts. I’m not an advocate of taking out loans for everyday costs - but, if it is to create profit then that is probably OK. There is a lot of help out there at the moment with perhaps less stringent criteria than usual. Our bank has contacted us to ask if we want to take up a bounce back loan. Up to 25% of turnover, no interest to pay for 12 months and thereafter 2.5%. (If you are a high street firm, can you apply for the grants the local authorities are giving out? I know they’re aimed at retail, but as you occupy high street retail space maybe it’s worth a shot. You don’t have to pay back a grant.)
What would I use the loan for?
Both of these should result in a growth in profit to pay off the loan and build the business. We have a number of trusted contacts who can help you with b) above, if you do not have your own. Feel free to contact me: [email protected] or 07887 524507.
For both a) and b) above you will need to plan for them to be successful. Again we can help. If you are to be advertising then think through carefully how you will handle the enquiries to maximise conversion of the leads. Lawyers are notoriously bad at handling and converting enquiries (effectively squandering their investment). Consider using electronic signatures to get retainer documents signed – which will help in converting them (again we can put you in touch with firms that offer this).
These are just a few thoughts. I would welcome you to add yours as comments.
See also our blog
Advice for Law Firms Returning to work at the Office – from the Law Society
and
Coming out of the Covid-19 Lockdown – some practical steps
The lockdown has been a shock to business. People are predicting the worst downturn in the economy in 300 years. If firms are to survive, what steps can they take? Here’s a start with a few suggestions:
I’ll explore them in a bit more depth below. But before-hand just some advice. Please do not expect that things will go back to how they were. One of the biggest changes I expect will be to the way that people think. That is your clients, your staff and indeed even the owners of businesses. No-one knows what the new ‘normal’ will be but there seems general acceptance that it will be different from how things were before. Emergencies tend to accelerate change and that has certainly been the case this time.
Your Overheads
I’ll just pick out a few:
Property - I’ve spoken with several firms who have told me they will be considering how much space they need to rent. For most firms this is one of the big 3 overheads (along with the PII premium and salaries). Firms have been forced to ‘work from home’ and discovered that flexible working can operate OK. So why pay for so much property? How will social distancing impact the space requirements?
Salaries – if you allow more flexible working, so that staff do not need to travel in to work every day, then that helps them with a better work/life balance, but also means they save on the travel costs. In effect a salary increase at no additional expense to you. A potential genuine win win. On the flip side, support staff who are just typing, might be looked at as a luxury. You might have found a way to operate without them during this time with some decisions coming up about retaining the roles. You could always consider upskilling them to paralegals if the potential is there – both staff aptitude and nature and volume of work.
Cloud-based Case Management System – if you are not already using one, this might now have gone up the agenda. It would unlock your potential to work remotely through one unified system and drive through improvements to your operating, reporting and managerial practices and savings in the cost of production.
Paper, Post, DX etc – old methods of communicating, often slower and more expensive than electronic methods. I see less and less people using DX, and more usage of electronic means of communications. I had the owner of one firm tell me a couple of weeks ago “Ingemar, if you had told me before that I should go paperless I would have shut you down. Now, all my arguments are shown to be worthless. What use is a paper file to me in the office when I’m at home or somewhere else?”.
PII Premiums – sorry, word on the street is that they are likely to be even more difficult to get and premiums are likely to increase by 13-15%.
How you produce your work
Lawyers are traditionally slow to change. I have the privilege of working with a lot of new firms. They have the opportunity to challenge the way things used to be done in their old firms. Necessity is the mother of invention and war an engine for change. We could substitute today ‘crisis’ for the word ‘war’. The effect has been the same. I don’t think that the changes are completely novel. Some, indeed many, solicitors were using the methods already, but this crisis has now driven the majority of lawyers to do so. Here I’m referring to video conferencing instead of face to face meetings saving everyone travel time, remote court hearings, conference calls, electronic signature of documents, working from home, flexible hours (more suitable to staff and perhaps even clients). With that comes a need for similarly flexible systems for people to use in the cloud, not just for producing work, but for capturing data, measuring and reporting on key drivers for the business. A move towards measuring output rather than input.
How you deliver client care
Clients will expect things to be done differently. They measure you on your service delivery and compare you against other service they experience – not on your legal knowledge, as most are not legal experts. Generally, the Legal Profession has been behind the curve. In our private lives we are all communicating via social media and it’s all instantaneous, video etc. There’s little new that has happened during the lockdown. Some firms were doing things differently already. What has changed is that the rest have been forced to address this. Clients have become used to you ‘meeting’ them via phone, video and conference calls, using emails instead of paper letters, electronic signatures instead of wet signatures through the post with all the delay that that causes. If you haven’t been doing this, your competitors have. If you try to go back to the old way of doing things, I suspect that client will vote with their feet. Flexible hours – to suit your clients’ needs, not the needs of opening and closing a physical office.
Compliance Obligations
Again, the rules haven’t changed in any significant way – just perhaps the way that they are applied. There has been some gradual movement towards more modern ways of doing things – again around remote working. These methods were there before but now might be more widely adopted. An example might be using a recorded facetime chat to screen capture and record AML ID verification: the client chatting to you and holding up their passport next to their face to verify ID. Saves them having to travel to the office or ‘send in’ their passport as some do. The COLP’s obligation to ensure that the practice is on a sure footing is very much to the fore now and will remain so over the next 12 months. Being able to check remotely that remote working staff are still doing compliance will also present challenges. Cloud based systems with robust procedures and reporting will be important.
Business Continuity & Disaster Recovery Plans
These are certainly centre stage now! Please take the time to revisit your risk registers and policies, define all the different categories of risk, to the firm, at the practice area level and matter level, then weight them, decide what should happen if they are high or medium and then give clear guidance to staff and enforce it. Review your Business Continuity & Disaster Recovery Plans in the light of your experience during this crisis. Learn from things that went well and what didn’t go well, construct a plan to plug those gaps and then try to imagine what else could happen, so you’re not writing a plan for the last crisis, but one that might be useful in the future. Remember, improvements to hedge one risk can raise their own issues. Nothing will be perfect, but good enough is good enough. Perfection is the enemy of production.
Staff Working Conditions
I am not an employment lawyer. There will be lots of advice out there, predicated to a degree on guidance from the government. There is sure to be a need to do provide a safe working environment, issue clear guidance and be seen to try to enforce it. The last thing you want is to be fighting claims from staff whilst trying to get your business back on a financial even keel. But this all has to be balanced against the need to be able to make a profit from the business. Otherwise it’s pointless as there won’t be a business.
Getting New Work
Do you know where your work comes from? So often I find that firms do not track this data. The best case management systems will have a build in ability to report on this. However, you can only report on data you have collected. For me this is essential data for managing your business. If you don’t currently gather that data, I suggest you devise a method for doing so from now on. This is almost an aside, albeit an important one. If you don’t have work, you have no business. The lockdown has starved many businesses of new work. I suggest you review how you have got work before the lockdown, how you think the near to medium future will affect work acquisition and then devise a strategy for getting work in. Generally, I am against taking out a business loan unless it funds an increase in profit. Financing robust method(s) for acquiring new revenue streams is one of the legitimate things I would suggest justifying taking out this loan. Here is a link to the government website about these loans: https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan. We can suggest some options for law firms wishing to explore this further. Feel free to contact us. [email protected] or 07887 524507.
What do you actually want?
It’s worth taking a moment to think about this. Listening to a recent interview of a specialist in M&A in the legal sector, he expected that as we come out of the lockdown there are likely to be a lot of opportunities as older law firm owners decide that they’ve had enough. There are a lot of firms where the ownership are in their 60s or older. A fair proportion may not have the energy or will to take their firm through the revolution in working practices that is happening apace. Other firms will have problems over cashflow. So, there are 3 options: carry on as you are; be a predator; be prey. Each choice is completely valid – so long as you’ve had a good look at what you want and what you can realistically achieve. If you want to be a predator then think clearly what you are and where you want to be. Define what you’re looking for and why. Consider carefully the resources you will need to make the acquisition work. If you want to sell your practice, then start by getting your house in order. Archive out rubbish, clear up balances. Get rid of stored paper files that should have been shredded ages ago. Find all the contract and lease documents. Take advice on what you might be able to get. Sorry to write this, but normally there is no value in a law firm (unless it has recurring income, which is rare, or a good quality will bank). Instead it is a question for the owners of getting rid of liabilities: run off (normally about 2.5 or 3 times annual PII premium), leases, staff costs, redundancy liabilities, overdrafts & debts. There will be deals to be done.
See also our blogs:
Advice for Law Firms Returning to work at the Office – from the Law Society
and
Just a few thoughts. Remember – wherever there is change there is opportunity!
What do you think? What other aspects should businesses consider?
The lockdown has been a shock to business. People are predicting the worst downturn in the economy in 300 years. If firms are to survive, what steps can they take? Here's a start with a few suggestions:
Just a few thoughts - what others should people consider?
On 4th May 2020 HM Land Registry issued new guidance to identity verification and the signing of deeds. Please note, these are stated as being temporary. They have extended the classes of people who they are happy verifying identity.
Here is a link to their press release: https://www.gov.uk/government/news/changes-to-identity-verification-and-signing-deeds?utm_medium=email&utm_source=govdelivery&utm_term=
Here is a link to Practice Guide 67A with more detail on the extension of classes of people who can verify identity: https://www.gov.uk/government/publications/temporary-changes-to-hm-land-registrys-evidence-of-identity-requirements-pg67a/practice-guide-67a-temporary-changes-to-hm-land-registrys-evidence-of-identity-requirements
Here is a link to Practice Guide 8 with more information concerning the process for the execution of deeds: https://www.gov.uk/government/publications/execution-of-deeds/practice-guide-8-execution-of-deeds
The Law Society has published guidance which you can access here: https://www.lawsociety.org.uk/news/stories/update-on-legal-practitioner-keyworkers/
In Summary: if you practice in Litigation, Criminal Law or Private Client (wills and perhaps LPAs) you are a Key Worker.
Here is a link to the link on the government website where you may check if you are allowed to have a Coronavirus test: https://self-referral.test-for-coronavirus.service.gov.uk/eligibility
If you are registering as an employer, the Law Society suggests you indicate that you have essential staff as your employees are working with the MoJ to support the delivery of the justice system.
A useful very simple guide to running a Client Account in a Law Firm issued by the Law Society. Here's the link - which itself has some helpful links.
https://www.lawsociety.org.uk/support-services/advice/articles/client-funds/
Find here a link to the Law Society's guidance issued 9th April 2020 on renewing your PII (Professinal Indemnity Insurance), with a view particularly to the Covid-19 crisis. https://www.lawsociety.org.uk/support-services/advice/articles/coronavirus-covid-19-renewing-your-firms-pii/
The Law Society Gazette gives a useful digest of nthe situation in this article: https://www.lawgazette.co.uk/news/sra-offers-little-leeway-for-firms-struggling-to-renew-pii/5103824.article#.XpirSen23Z4.linkedin
I think we are at risk of making this situation economically worse for ourselves than it already is. I’m talking about lack of confidence. I thought this during the 2008 crash. The news channels will focus on the negative, the sensational, the catastrophic – it makes them seem more important, they used to say ‘it sells newspapers’, although in this digital age they’re becoming less relevant now. No-one seems that interested in putting things into context, to report good news stories. So, we spiral into gloom and despondency. That is NOT going to help keep our economy going. It’s not going to generate income and jobs for people. It’s not going to give one the right attitude to successfully adapt to the changed situation.
We, as a nation, indeed as a planet, have a choice: do we sit at home and worry about how bad things are and hope that they will get better – or – do we say to ourselves ‘OK, this is really bad, I’m going to get up off the ground, dust myself down and then put all my effort into adapting my business to cope with this’?
I would say it is in your own self-interest to do the latter. Indeed, I would go further that it is our duty to our colleagues, our clients, our neighbours, our town, our country to do so. If everyone chooses to do this, chooses to find a way to trade, then the damage to our economy is likely to be much less and we will much better prepared for the ‘new norm’ afterwards (whenever afterwards starts).
I wrote ‘choice’, because our attitude to stuff that happens is about the only thing about which we ultimately have a choice. You might be a natural pessimist, but you can choose to adopt a ‘can-do’ attitude. If you are a Brit reading this, you can draw on national references like the ‘Blitz or Dunkirk spirit’. If you are from another country, there will be references from your culture from which you can draw for inspiration.
In this crisis, we have many more tools to help us trade that were not there in past crises or would not have been there if the Coronavirus crisis had hit say 20 years ago. In 2008 the challenge was lack of liquidity. We have liquidity in the banks now. The challenge that we face is social distancing. But we have technology that allows us still to see and talk with each other. We have electronic banking. We have digital signatures. We have search engines to enable people to find people, businesses to find businesses. I know that some areas are very badly affected by the shutdown. In the UK the vast majority of our economy is in the services sector. A large proportion of that can still trade. The government is providing 80% of income for furloughed staff. As they won’t now be spending on travel, so they may well be in a cash neutral position. So, these people are cushioned and have income to spend. Indeed, if they do spend some income, they will be helping the economy keep turning, thus making it more likely that jobs can be retained.
I was shocked to read a post from a senior partner of a law firm in which he wrote that he was using his enforced resting time organising the screws in his shed! Sorry – in my view he should be using his time to speak to people, research and wrack his brains for ways to maximise opportunities for his business to adapt it to the current circumstances.
So, this is a call to arms! Business people, employees, workers, families – we are all in this together. Let’s find ways to do business. Call people up. Zoom them. People buy from people. Be inventive. Do things differently. People will be more open to working differently than they were before. I spoke with the owner of one of our client law firms this week. She said to me: “Ingemar, if you’d talked to me about working paperlessly before this crisis, I would have closed you down. Now, all my arguments are blown out of the water. What use is a paper file in the office to me now?”. There are restaurants doing home deliveries, businesses altering what they make to what’s in demand: PPE, hand sanitiser. Adapt and survive.
One for Litigators: Dispute Resolution, Family, PI, Immigration (JR), Civil Lit - anyone who creates Trial Bundles and Trial Bundle Indexes. We are always looking out for ideas and software that might help our clients.
From experience, I know what a pain they are to create. You spend hours on this. Then at trial 1 page is wrong or missing and the judge shreds your costs for the trial bundle. To add insult to injury - it's not really legal work. It's got more to do with being a publisher!
We've come across some great software that allows you to create them very easily, a lot of it by drag and drop. You decide the section structure and pagination style. There's a one-off charge of £45, but you can then go back to the bundle and change it at no extra expense. The time saving for you is massive. The charge could even be made a disbursement should you want. When it's finished you click a button and it creates your Index! All soft copy - so someone else can print it out at their expense. With over 50 courts now stating that they will accept soft copy Trial Bundles, we expect that this method will become the norm. It will certainly save masses of time and cost. As our clients will know, we're always looking out for things that will help them: improve profit and manage risk.
If interested give us a shout and we can introduce you so you may make your own assessment. 07887 524507 or [email protected]
To furlough or not to furlough - that is the question! I am not an economist of an accountant but like many business owners I am having to grapple with extraordinary decisions at this time. I'll share my thoughts if you join in and share yours in the comments!
Like many small business owners, I take a small income and then take dividends when net income and other business needs allow. There is no specific assistance for this sector of the business community from the government. One could argue that this is the most dynamic sector of our economy – from which the giants of the future will grow. One is faced with the stark options: plough on or put this business in hibernation - which would allow the directors to carry out their statutory duties only and their staff to receive 80% of their salary from the government.
Here is a link to the government’s ‘Coronavirus Job Retention Scheme’: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme So the terminology I’ve used is not quite correct, but it seems to be what’s out there. In fact the government is trying to stop businesses from putting staff onto furlough (unpaid leave), but rather to keep them on as employees, receiving 80% of their pay from the government under this scheme. However, if you are to benefit from the scheme the employee cannot work: ‘To be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the organisation. This includes providing services or generating revenue.’
The trouble with the 2nd option is that you still carry certain business overheads but now have decided against generating any income. Staff may be able to survive, but the owners (who take all the risk) will receive 80% of their small salary, so even from a personal viewpoint the maths does not add up, let alone from a business standpoint. Another issue to bear in mind is that your customers may still be out there wanting you to do things and willing to pay. For lawyers, areas that will continue or even increase are: employment law advice, family law advice, wills, estate planning, LPAs, probate, litigation, personal injury and other claims, insolvency and bankruptcy, business rescue and restructuring, commercial law, corporate law. I am not comfortable ethically or commercially with the idea of putting a firm in mothballs ‘until this is all over’ as some have talked about. How long will that be? Initially people thought 3-4 weeks. Then 3 months. Now the Chief Medical Office is talking about 6 months or more. During that time your competitors are taking tough decisions to adapt to the new environment. I’ve had consulting sessions (remote of course) with a number of law firms to work through their plans and look at ways to adapt their ways of working and look at new strategies to enable them to survive and indeed come out of this stronger and more profitable. In little over a week I’ve learned of 4 of our client firms who are actually expanding. No surprise that they are all operating on cloud-based case management systems. Although this current crisis has been inconvenient – they already have the machinery in place to work remotely as one unified team and so can concentrate on hunting clients – perhaps the clients of those firms who have gone into furlough… For those not yet on a cloud-based system I would suggest the time to act is now.
The alternative to hibernation is to adapt and survive. Isn’t that what nature and business and people have always done when there is change? The world has changed. It will not go back to how it was. There is a ‘New Norm’ for the next 3-6 or more months. There will be a ‘New Norm’ when we eventually come out of this. I am sure it will have accelerated trends that were already happening: more flexible and remote working, giving clients access to advisers through remote means such as audio and video conferencing, signing documents digitally, work acquisition through remote means (even if they are your own existing clients they will contact you remotely rather than physically face to face), remote team meetings and collaborative working through TEAMs, zoom and other software platforms – and an increased movement to working on cloud-based systems.
Do you find option 2 the option more appealing? If so, feel free to contact me to talk through your plans. In your deliberations, please take advice from your accountant.
I’d welcome anyone else’s thoughts. We’re all trying to work this one out and only hindsight will tell what was the right course.
