How Law Firms Can Survive and Thrive in a Coronavirus World with Tim Corcoran
In this episode of On Record PR, Gina Rubel goes on record with Tim Corcoran, principal at Corcoran Consulting Group, LLC, with offices in New York, Charlottesville and Sydney, and a global client base. He’s a trustee and fellow of the College of Law Practice Management, an American Lawyer fellow, and a member of the hall of fame and past president of the Legal Marketing Association (LMA). A former CEO, Tim guides law firms and law department leaders through the profitable disruptions of outdated business models. A sought-after speaker and writer, he also authors Corcoran’s Business of Law blog. We’re now in week four of the COVID-19 pandemic. Many people are still working from home, and we’re getting used to the current normal with our physical distancing.
During the conversation concerning how to survive the short-term to thrive in the long-term, Gina and Tim addressed:
- A law firm’s value proposition
- How to use a decision framework to make tough decisions
- How to identify short-term and long-term growth drivers
- What good management looks like in times of uncertainty
- How to evaluate what law firms are doing well regarding furloughs, layoffs, reduced partner profits and compensation decreases
- Risk assessment by practice or industry in a firm’s scenario planning
- Lessons learned from crisis and scenario planning
- How not to be a peace-time leader when you’re at war with a crisis
- Succession planning for small and big law firms
- What the legal industry will look like post coronavirus
- Why innovation and adaptation will be the future of successful law firms
Best Practices for a Law Firm in the Short Term and Long Term
When you say survival in the short term and thriving in the long term, I’m not sure many law firm leaders are thinking about both of those time spans right now. I think it’s perfectly normal, acceptable and necessary for them to focus on the immediate term. One of the great lessons for the legal marketplace from 10-12 years ago, when we had our big recession, was that too many short-term decisions impaired the firm’s abilities to thrive in the long term. I think it’s important for law firm leaders to try to balance: What do we need to do to make sure that we’re open for business tomorrow and we are able to survive? But we’re also able to adjust to whatever this strange new way of working is for the next few months or for however long it may take, but we also have to be ready to retool for the long term.
Also, we must not impair our ability to operate in that longer term because the default assumption in the past was, whenever this thing is over, we can just go back to the way it was. I think we’ve learned beyond a shadow of a doubt, not only after the last recession, but in the magnitude of what’s going on now has proven that we won’t go back to the way it was. There’s a number of things that will continue to stay changed, and that can be a very positive thing for individual lawyers, for the law firms they work with, for the clients they serve, for the court system, and for the marketplace as a whole.
What Law Firm Leaders are Doing Well both Short Term and Long Term
I think one of the most common headlines I’ve seen in the last two weeks is that law firms, as they tighten their belts – as any good business should in a time when revenues are uncertain – should figure out: How do we preserve our cash and ensure we’re operating tomorrow? What they’re putting on the table is everything.
10 to 12 years ago at that recession, the number one objective of the cost cutting was to preserve short-term partner profits at all costs. The only thing that wasn’t on the table was reducing partner draws and partner profits. Everything else, from laying off associates, canceling summer programs, laying off staff, closing offices, etc., was on the table. Partner profits were not because they thought it was a short-term blip.
What I’m seeing now, in addition to furloughs, layoffs, and tightening their belts on projects that they want to do but are not mission critical, is that they’re also saying, “Maybe our owners of this business should recognize, not only from an accounting perspective, but from a practical perspective, that their job is to be rewarded through the profits of the enterprise, and therefore, they’re paid last. While we’re not saying you get nothing, we’re saying your partner draws might need to be reduced even as we tighten the belt elsewhere. Partner pay is on the table. It’s not just a sacrosanct area we’re not going to tackle anymore. I think that’s a lesson that we’ve learned, and I would pat the law firm leaders on the back for those tough conversations, saying, “We’re all in this together,” especially the owners.
That reminds me of the Naval ship captain who has been relieved of his duties because he let people know that he had midshipmen and others on the ship that were sick. He took a fall there, but he stepped up, he led, and he knew it would be a risk. To me, the greatest leader is the one who takes some of the fall, or sometimes all of the fall in his case, unfortunately. I think it makes a lot of sense for the law firms that are doing that.
It’s also one of the distinctions between management and leadership. Without question, there are tough management decisions to be made, and any business owner or executive, including those in law firms, are not separate from this. You’ve got to make some tough calls and that means when you tighten your belt, people’s lives will be impacted, your product lines will be impacted, and your clients will be impacted.
One change from 10 to 12 years ago is that now we’re seeing the leaders step up and say, “This is not just about the money. This is not just about surviving tomorrow. This is also about morale. This is also about sending a message.”
If you’re left to your own devices, you might actually hurt the business by making the wrong cuts or the wrong temporary decisions. Hopefully, adults will operate in the best interest of the organization and its leaders, but as we saw 10 years ago, many were just acting in the interests of the owners and no other stake holders mattered. I’ve seen a different tone now for the most part. I think that’s a nice evolution.
As a lawyer and former litigator, they don’t teach you either management or leadership in law school. It’s one of the things that we, as type A communicators, seem to think we have in the legal industry, but it is often something we need to learn. I certainly had to learn that as a business owner myself.
How to Use a Decision Framework to Make Tough Decisions
Going back to leadership versus management, there’s a couple of categories and items for each. I think leaders of the law firms will typically be those big visionaries that people love to rally around and follow, but they may not have a detailed understanding of the nuance of how the business is run. Therefore, they allow and perpetuate inefficient, dilutive-to-profit processes.
We also have those who feel their job as an elected person at a law firm is to answer 500 emails a day and make battlefield decisions, such as deciding on the color of the logo on that mailer that’s going out, to addressing whether or not an associate that we’re recruiting should get $10 more in the offer letter, or risk losing him.
Those are ridiculous decisions for someone in the corner office to be making, but they think that’s my job. I’m supposed to be in a directing style telling everyone what to do. I think in this time, in the short term, it’s a combination of both. We want the folks in the corner office to be saying, “Here’s our vision. Here’s what we’re trying to accomplish. It’s going to be tough to get through this, but we’re going to do it together. Here’s how.” Then, there needs to be a decision framework that says, “Here’s the how. Here’s what we’re doing. Let’s go over communicate.” There should be a framework. It might be a simple two by two, like mission critical or not mission critical on one axis, and short-term and long-term time on the other axis.
We start to orient the things we’re doing and the people who are helping to do them in that framework. We can’t touch those who are mission critical and needed immediately. In fact, we might need to invest more in those resources to make sure that they keep us afloat. Those who are not mission critical and whose value is more likely a little further out, they’d be helpful to us a year from now. You could also use who’s mission critical on one axis and then whether or not these folks have a meaningful contribution on the other.
Example of a Decision Framework
Here’s a framework that I stumbled on. My friend, Jordan Furlong, quoted a cabinet minister from Canada, and they put together a cabinet to help with COVID-19. This cabinet minister laid out a metaphor, which I thought was really instructive. He said that our job as a government, as with any manager of any business in the short term, is like dealing with a plane in a terrible storm. The first thing we need to do is land the plane. We might lose a tray table or two. We might have a couple of bumps and bruises. There might be a broken window, but we’re landing the plane. That’s our number one priority in the short term.
In the medium term, it’s securing that plane on the ground to make sure it’s safe and out of harm’s way while we wait out the storm. The next stage is getting ready to fly the plane again. Do we have secure supply chains? Are we ready to take off when we need to? That three-stage metaphor is what I think managers should be doing right now, where they conduct triage. In medical terms, triage is just the simple assignment of urgency. When you have a number of cases, and you don’t have the resources and bandwidth to address all of them equally, you simply assign urgency, and you say, “These come first, these come second, and these come third.” That’s what leaders need to be doing. They need to ask, “How do we do triage?”
The first role is to land the plane, make sure the business can stay afloat, and pay its people and delivery services tomorrow. Then, securing the plane on the ground might be: Do we have the right tools and resources so people can work from home? Have we communicated with our clients? As it turns out, we don’t have any central database of who our clients are. We don’t have the ability to go pull all of those pieces of paper and Rolodexes off peoples’ desks. Maybe now, this is a time we invest in saying that CRM has been sitting on our desk for all these years. It’s no longer optional for the lawyers to say they’ve got their own quirky way of hiding their contacts from the rest of you.
Now, it’s mission critical that we have a central location for our clients. It’s about securing the plane, and then taking off as we’re starting to think months out. For some people, maybe they’re halfway through this. Maybe others are at just the beginning stages depending on where your listeners are. But you start to think, “It’s not going to go back to normal.” What can we be doing now to make sure that we’re ready for when the market opens back up when demand returns? That level of triage is exactly what I need managers and leaders to be doing right now. That triage, in the sense of urgency, will differ depending on which phase you’re in.
As a consultant, this is an area of expertise that you bring to your clients where it is mission critical, and you’re helping them to work through those decisions, where they might not necessarily have everyone who has that CEO background and framework to do that.
Yes, but I also have a lot of things that I do right now that would not be deemed mission critical like some of the projects I work with my clients and law firms on. I also work with legal vendors, suppliers and law departments. There are a number of things I do for all of those clients where right now, it would be in their best interest to say, “Tim, we need to put a pause on that.”
But, then there are some other projects I work on, which have to do with performance and under-performance, or measuring profitability. This way, we truly have a better sense of what work will grow the firm versus what work will dilute the firm. The last thing we want in this terrible time is to say, “Everyone double down on the work that costs us more money than it makes, and everyone cut the funding from the work that makes us more profit.” Some of the work I do has the potential to thrive in this time, but for some of the work, business leaders should make a good decision to say, “Let’s put that on hold.” I think that’s the triage I want them to do across their business for all categories.
The same holds true for a pure marketing agency. We are almost one hundred percent crisis management right now and have been for over six weeks. Whereas, some of the fluffier work that we do on the PR, marketing and business development side, we’ve quieted down. We’re looking at whether those communication efforts support long-term growth, and why it matters. Talking to people like you who are looking not just for mission critical now, but for that third stage of triage. That’s the thing that they don’t teach us in law school. They teach us how to think through a case, but they don’t teach us how to manage a company.
I don’t hear this very often, if at all, but no business leader is claiming they were ready for this. In my corporate days, I had a requirement where we had internal auditing and risk managers come in and assess each business line. Each product lines come up with a risk profile. We had to assess our risk. It was part of our obligation in reporting to the public markets about where we had exposure. That was an exercise we didn’t just look upon as some administrative hassle that we had to do for corporate. We thought of it as our triage list.
I spent some time at one company that had a crisis nine times a year, and it was almost always self-induced by undue optimism in its forecast, and then suddenly, “Oh my God, put a freeze on travel.” We’d say, “It’s only February. How can you do that?” We were ready for that because we had gone through the exercise of scenario planning. We had a plan A, plan B and plan C. None of us would have been prepared for a pandemic, but we weren’t built prepared for nothing.
As a crisis communicator, I have found that our clients who have done scenario planning, especially some of our clients who’ve gone through Hurricane Katrina or Hurricane Sandy, were much more equipped to weather this storm that we’re dealing with now. It goes to show that risk management, planning, and scenario training makes a huge difference. Our one client down South hit the ground running with how to get everyone working from home immediately and how to assess risk for their clients, so that they can be supportive in the short term and thrive in the long term.
Leadership Roles During a Crisis
I think there are some lessons that we’ll learn from this process. Just as we give lip service to coming up with strategic plans or marketing plans, there are functions that have given lip service to scenario planning. We’re going to find that there are leaders of the business who are just ill prepared. One of the fallouts is going to be: Who was prepared to act right when this unbelievably unlikely event occurred? Who had some plan that they could act on? Who had an easy-to-access phone tree of the critical contacts, both internally and externally? Who was able to make quick decisions?
While there is a chain of command, we’re going to find out that we’ve got a lot of folks who are in leadership roles who serve as different types of leaders, and other professionals who aren’t suited for leadership at all. Some of the business professionals are peacetime leaders. When times are good, they’re fantastic at keeping that ship on the right path, but they’re not good wartime leaders. Good wartime leaders are not always the best peacetime leader. It’s about having the right mix of talent and the right amount of structure in your organization where you say, “We do need planning, we do need to have forethought, and we need the duty to have budgets. We need to have a plan A, B and C for when something goes wrong.” If you don’t take that stuff seriously, then maybe you’re not equipped to be in a leadership role in the business. I think that’s
We work with an Am Law firm, where we did their cybersecurity plan last year, and we’ve been trying to go in to do the training. The partner in charge of that was trying to get the attention of the managing partner. The first time in over a year that I spoke with the firm managing partner was three weeks ago, when we were writing their communications for COVID-19, and now all of those other things have become important. Even with the crisis plan in place, we had materials to work on from for our smaller business owners or smaller law firms. I also think it’s important to mention that while they may have the bandwidth for a full crisis plan, even having a succession plan right now and some tools in place would be very valuable. We started working on our revised succession plan five weeks ago because what if I get sick? I’m the sole owner of the company with 10 employees who’s going to take over, so we did do that. We continue to refine it so that it’s clear who’s going to manage each client.
What Smaller Businesses Should Be Thinking About During a Crisis
To some extent, many of us had that small business mindset even if we’re in the largest organization. What I mean is that nobody has unlimited time or funds for what we perceive to be the nice-to-have initiatives, when we’re so busy trying to get our product out the door. Whether this is a bank, a widget manufacturer or a law firm, they’re all billing time. The management roles they have are part-time hobbies. In that sense, few of us have unlimited capacity to spend three weeks doing our scenario planning. We start dialing back the layers and we say, “Maybe we can’t engage in this and go offsite for three days to do scenario planning, but maybe we could do something basic. Here’s a framework, and here’s a webinar training from someone who could help you understand the principles of scenario planning.”
It’s about thinking through the possible scenarios, then assigning some level of probability, and for those that have a higher probability, a little bit more detail on how we’d act. Absent that, maybe we ask, “Do we have good operating plans, so we know how to operate the business in peacetime? That way, when a pandemic or something startling happens to disrupt our flow, we’re at least able to take those operating plans and say, “Let’s use this as a framework and ask what’s nice to have, and what can we accelerate, improve upon or invest in.
Maybe we can’t even do that. Dial it back a little further and ask, “Do we have a position description that lays out the accountabilities for our leaders and our managers in good times and in poor times, so that while we may not engage in scenario planning, we know we’ve got the right people in the right roles who can act as a wartime leader and a peacetime leader?”
We’re so focused on getting the product out the door that we’re surprised when anything disrupts our flow. We don’t have to be perfect at this, but let’s do something. Have a succession plan, have position descriptions, and start to have basic operating plans with standard operating procedures. As a result, we’ve actually got all of our main procedures laid out in a way that if a critical person is no longer here tomorrow, we’re not bereft of their talent overnight. Of course, we miss them, but the business will go on.
Good Management in Times of Uncertainty
In a time of uncertainty, we need to have the right people driving the bus. We need to have the right roles and responsibilities. We need a mix of personalities, a mix of talents, and a mix of skill sets. We need folks in the room who are the naysayers because good leaders need to hear from multiple sources. As I said, some managers will default in times of stress to a directing style where they simply say, “Do A, B, C, D, and E. Do it now, and don’t ask questions.” Others will take the opposite approach and say, “Let’s have a committee meeting, but we can’t have the committee meeting unless we have a subcommittee meeting and a pre meeting. Did she plan the agenda for the pre meeting?” However, what we need is somewhere in the middle.
We need to have a team of leaders that are willing to operate at a fast pace, make quick critical decisions, but be guided by some basic level of a decision framework. What are we solving for? As I mentioned, the plane analogy is good because it allows you to have different constraints and different objectives based on the phase you’re in. Those decisions you’re making for tomorrow are different than decisions you’ll make three months from now. We’re all pretty comfortable working from home, and now, we’re thinking about what happens when the office is reopened.
The Future of the Legal Industry After Coronavirus
We in the pundit class can sometimes fall victim to making projections that reflect our wishes and desires and not the reality. I’ll be careful and say that I don’t know any more than the rest of the world knows. That said, my comments, I would like to think, will resonate with lawyers who are trained in how to apply patterns from a related, but dissimilar event, to some new, instant issue. We like that power of the precedent. There is nothing about the disruption of the last 10 years that was unpredictable. The only people who were surprised were those folks who weren’t paying attention, or who thought that somehow the practice and business of law were immune from the economic principles that are applied to every other business on the planet. The last 10 years has been fairly easy for me to predict because it’s a pattern. It’s a well-worn path for businesses or markets going through a disruption.
This is a little different. That said, what’s different is that maybe the pace of change is no longer in the control of the folks who are the subject of the change. Before the pandemic we had some fun discussions from bar associations about whether or not we’re going to open up the practice to non-lawyers, or whether or not we’re going to agree to that innovation. The market has already decided that innovation and adaptation is the coin of the realm in all the bar associations and the lawyers who are contributing to that.
The market doesn’t need permission to buy legal services from alternatives to the traditional, and they proved that before the pandemic. But now, it’s post pandemic. We’re going to see some of the things we thought would never change. “Courts will never allow appearances by video. We’ll never have e-signatures. Notary publics will always be an existence until the planet explodes.” I don’t know if those things will be now universal, that we can attend court hearings by video and, or that an e-signature will work in every courthouse. The fact is, it went from it never happening in this lifetime to it happening overnight in some places.
Why Innovation and Adaptation are the Future for Successful Law Firms
These sacrosanct, sacred cows, not that people necessarily have been clinging to it, but they feel victim to, “This is the way it is. I can’t fight city hall.” Well, city hall changed right out from under us. I think the law firms now have the opportunity to say that there’s probably a continuum of enthusiasm. It went from, “I can’t wait till it goes back to the way it was when I grew up in this practice to, “We’ve been dying to make changes because we see it would be better for us and for our clients, but there are so many structural hurdles. Who can stop long enough to retool?” Well, suddenly we’ve got that time.
As we come out of this, it’s important to ask, “What had the clients become accustomed to? What has the market, the courts, or the different structures put in place to manage the flow of legal work? What have they become accustomed to? Why would we revert back to something less efficient, less effective, less client focused, and more costly? Why not try to indoctrinate those practices into the way we do business? Because it has always been more profitable to find efficient ways to deliver the things we’re really good at than it has ever been to be as inefficient as possible. That allows us to bill more hours.
Maybe law firms are finding out if we rely on just billing more hours as we come out of this, we’re going to be in a world of hurt. However, if we can use our newfound expertise at being efficient, perhaps we can make a lot of money and also please our clients as we come out of this. That’s my hope. The adapters are realizing that you have to be client focused, and you have to be able to evolve with the times, and hopefully the law firm leaders get that.
I was reading a business journal survey from the West Coast, and they asked business leaders if working from home was going to be normal or if it will it go back to everyone being in the office? 73% answered that it was going to go back to everyone in the office. I’m to make any prediction, I can tell you virtual work will become much more normal after this.
What an opportunity as well. Law firm leaders should understand why businesses for decades have had flexible hours, flex time, shared work arrangements, and worked from home. It’s worth it to a firm to buy a laptop for someone who’s going on maternity leave or has got an elder parent to care for to say you’re valuable. This artificial constraint is dictated by HR or our general counsel saying, “We’ve got to minimize risk, and if we treat people differently, that creates exposure,” but what’s better for the business to say? How do we access the greatest talent in this constraint of having them sit in a cubicle or sitting in an office right next to me out the window? It’s opened up worlds for legal marketers, for example, where we have this notion that sometimes we have to have a marketer right next to the lawyers.
Otherwise they can’t get things done. We’ve proven beyond a shadow of a doubt that literally 100% of all law firm resources are remote right now, and we’re still doing business. I hope the good leaders come out of this with the staffing and the office mindset that maybe we could reduce our square footage. Maybe we could actually reduce our lease costs and fixed costs in this business. Maybe we could access talent that we’ve had to say goodbye to because they couldn’t fit our nine to five in this headquarters building mindset. What a great opportunity to improve your talent pool, lower your costs, improve your profitability, and make people happier. That’s business leadership.
One of my favorite things that my husband ever taught me from his management days was this term, “Give people the rules and tools to be successful, and they will be successful.” If we did that with all lawyers and staff, and we treated them equally in terms of their importance, and we allowed them to work from home, we would not only increase efficiencies and lower costs, but we’d increase diversity and inclusion.
This industry would be meeting its objectives, or those of which we keep talking about, but haven’t seen much movement. I do believe that there’s going to be a lot of change for the good, and that there will be a lot of opportunities.
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