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1 April 2020

Law firms and crisis management in the CoVID era

Eliott & Markus

France, like the rest of the world is currently stricken by a health crisis of unparalleled proportions and its economy is at a standstill. The French Prime Minister stressed that we were in it for the long run. The costs for the French economy are and will be tremendous, despite the government’s measures. This brutal shock will greatly impact law firms’ workload. We asked several experts in crisis management to give us their point of view on the current situation, as well as some advice for law firms on how to mitigate as much as possible the negative impacts of this crisis.

What is a good crisis management according to you ?

Emmanuelle Hervé, CEO of EH&A Consulting : « We have to differentiate crisis management and risk management. The latter aims at identifying possible risks (corruption, harassment, departure of a partner…), placing them on a risk map and setting up processes in order to lower those probabilities. Crisis management does not care so much about the cause as it does about the impact. It spots « weak signs » and tries to assess their possible impacts whether in financial or human terms. It elaborates different scenarii that evolve until reaching the worst possible outcomes. For example, when a company is forced to put some of its employees on partial leave, neglect can occur, negatively impacting their mental health, leading to depression and suicide. The company can then be sued by the family, which can lead to very heavy consequences in terms of finance and reputation, leading to bankruptcy. We can also imagine a scenario in which a cashier gets infected at work and subsequently dies causing a communication crisis for the supermarket. A crisis unit’s work, contrary to what is often thought, is not to take operational measures but to devise a strategy to prevent the worst scenarii from occurring or at least to lessen their impact. This work has to be conducted weekly until the end of the crisis. This strategy is then implemented through concrete actions and communicated to all the stakeholders whether internal or external. Some firms have already shut down their crisis units even though the first thing to do is to realize that we are in it for the long run. There is a huge discrepancy between those who had already thought their processes over and who implemented them and those who hadn’t planned anything.”

What is happening for those firms which didn’t anticipate and which did not have a crisis management process ?

Emmanuelle Hervé, CEO of EH&A Consulting : « There are two cases : those who had nothing in place, do not know where to find the information and refuse to get external help and those who had nothing in place but appeal to external experts. Depending on their situation, the support can be thorough or more limited. It is worth noting that even those who had devised a crisis process can get rid of it completely and take reckless decisions in the spur of the moment. Others refuse to heed the expert’s advice. »

How does crisis management for law firms differ from other firms’ ?

Dominic Jensen, Partner at Librato, Law firms for lawyers « Some law firms are on deck 24/7 to answer their clients’ requests, namely to help them map all this crisis’ implications and try to mitigate them. The situation is different for transactional or specialized law firms which are already seeing an important diminution of their workload as many operations get postponed. Generally, law firms crisis are linked to strains on remunerations or the departure of partners. We are already seeing a heightening of those tensions, as law firms have a low cash flow. Partners, whether they have margins or not need to agree now on their remuneration in order to prevent those tensions. Cohesion is the other big issue as associates are getting less and less cases. Some firms have taken some liberties with the association contract : no work, no pay. Bars have already been alerted on several cases. It is paramount to reassure your associates on the futur, to inform them regularly on the evolution of the firm’s finances and to set up informal meetings to talk about lighter subjects. Partners need to alleviate anxiety while maintening teamspirit. It is crucial if you want to restart in prime conditions. »

Was-it easy to switch so suddenly to complete teleworking ?

Dominic Jensen, Partner at Librato, Law firms for lawyers « The way lawyers work rendered the adaptation pretty easy, even though the adaptation is more difficult for those dealing with court litigations. Law firms have rapidly gotten a handle on the teleworking tools. »

What can law firms do to mitigate the impacts of the crisis ?

Dominic Jensen, Partner at Librato, Law firms for lawyers « They need to deal with the most urgent matters by trying to preserve the firm’s cash flow. They also need to contact their accountants and bankers in order to postpone debits and apply for state subventions. It is also critical to offer associates a strategic vision for the future. Those who work less could try to take advantage of this time to reflect on the post-crisis strategy and especially the help that could be offered to clients as well as the tailoring of their services. Whatever their situation, they need to communicate with their clients throughout this crisis. » It is indeed highly likely that the demand for experts in labour law, restructuring, health law, responsibility law will soar. Law firms’ practices will need to be up to the task. Every innovation, law, decree that have just been or will be published won’t disappear just like that.

Are the measures taken by the French government up to the challenges facing the legal sector ?

Dominic Jensen, Partner at Librato, Law firms for lawyers « I noticed a general approval of those measures. Lawyers, who are independent, don’t feel left out. Many law firms were reassured by their eligibility to the loans of the Public Investment Bank. However they remain worried about their post-crisis cash flow (especially regarding rents). There is also an important question mark on the associates situation and their eligibility on the 1500 euros indemnity for independents or the conditions through which they could benefit from sick leave to take care of their children. »

What are the good practices to follow in order to manage this crisis ?

Fabrice Lorvo, Partner at FTPA « The first rule to follow is to be present. In order to play our role of counsel, we have to be fully functioning to help our clients overcome their own hardships. This obviously means that the lawyer already has managed to ensure the continuity of his activity (from home to limit the exposition of his teams) and informed his clients about it. In addition to this, the lawyer will need to further the human aspects of its communication with his clients, opponents and stakeholders. Indeed, while the scope of the quarantine’s psychological consequences are thus far unknown, they are not to be neglected. Lawyers are also entrepreneurs and as such have to deal with the same hardships as other firms. Law firms will have to find the balance between contradictory injunctions. Lawyers will have to show their solidarity to their country, their clients and their teams. In this regard, one can only praise the initiative of the French Conseil National des Barreaux which quickly launched the operation « COVID 19 / Lawyers in Solidarity » in which voluntary lawyers can offer firms a 30 minutes free advice session. We can also hail the efforts of the government, administration, bars that have informed the public with clarity on the exceptional measures taken to support companies during this crisis. Trying to save the individual entity of the firm should not be done or should not be perceived as being done at the expense of its teams, whether they are partners, associates or staff. One needs to be extra-careful to maintain a sympathetic social and human work environment.  Meanwhile, law firms also need to protect their structures. They are firms and as such need to keep on taking part in our economy, especially by continuing to bill their services. Law firms will need to pick a position between those contradictory injunctions while the future is completely uncertain. »

Are there actions that need to be avoided during the crisis ?

Fabrice Lorvo, Partner at FTPA « Rather than listing all the things to avoid, one needs to be aware that those who will make the wrong choice in the search for the balance afore-mentionned will damage their image for the long run. We are heading towards a very long and hard economic crisis and it would be useless to worsen it further by adding on top of it a reputation crisis. We all know we need 20 years to build a reputation and 5 minutes to lose it. The digital era deepened this issue and we know 50 years are needed to repair a broken reputation. Indeed, through the search engines, any data is immediately and forever accessible. If part of the public were to negatively perceive your actions, it could create a buzz and be a long lasting blemish on your image. An american law firm in Honk-Kong was criticized for having reopened its office too early and potentially having endangered its teams. Even though, as evoked by the French President «the day after won't be a return to the day before», nothing will be forgotten as we can already see through the #wewillnotforget on social networks. “ Emmanuelle Hervé, CEO of EH&A Consulting : « Partners should already plan a feedback session on the crisis as well as KPI (Key Performance Indicators) in order to assess the success or failure of their strategy of communication. They need to communicate throughout this period with all their stakeholders and staff, whether they be interns or temporary workers. In terms of internal communication, they need to give all the support possible (monetary, psychological…) to sick associates, staff or their families.» Some brands have achieved a very high visibility thanks to their reactivity and generosity like Michelin which closed its factories very early on, Pernod Ricard by delivering alcohol to produce hydro-alcoholic solution, Yves Rocher and Dior by producing such solution, Chanel by sewing masks, Armani by producing protective gear, SFR gy giving mobile phones and data or Promod by closing online sales to protect delivery workers. Some, conversely, have damaged their reputation : in a La Poste depot, the management called the police to prevent workers from exercising their withdrawal rights ; threats of sanctions against workers if they were to use their withdrawal right in a Carrefour supermarket ; use of freelancers in a Franprix supermarket ; continuation of delivery by Amazon and McDo despite being non essential.

What is at stake in terms of reputation and communication ?

Gwénaëlle HENRI, CEO of Eliott & Markus “ More than ever, law firms need to be coherent with their communication strategy and their offer. It would be a bit tacky to assert oneself as the firms’ “business partner” or to present oneself as a “committed law firm” if at the first hurdle, they were to give up on their client or harass them to pay the fees. It is a dilemna, because the first reaction, which is understable, will be to try to survive, to keep afloat. However professional services firms, as any firms, will need to fight this urge in order to ensure their post-crisis reputation. My advice is thus to stay coherent and get your crisis choices in line with your brand and communication strategy. The silver lining of this crisis is that it will convince the most reluctant of the importance of having digital and internal communication channels. It will also increase the awareness of law firms regarding the utmost importance of a pro-bono approach. There is no better moment to rethink entirely one’s strategic marketing. The cards are being brutally reshuffled and we need to ponder now over the future needs of our clients. »
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