Now is the time to learn from the experience that we are all going through and prepare your firm’s disaster plan for the future.
Covid-19 has highlighted the importance of developing long-term business, financial and operational strategies that can provide some sort of guidance during any time of chaos. Some law firms might be taking this current world situation to strengthen and revisit their disaster plans, while other practices might be looking to create their new plan from scratch since they didn’t have one before this.
Regardless of what life cycle your practice is in, this article will highlight six different tips for business, financial, and operational planning during Covid-19 that can help keep your practice right on line.
1. Have a team that’s ready to act
As with any business, one of the most important things any solo or small law firm owner can do is consult with a team that will help you to grow your practice and business. An ideal team includes legal counsel, financial advisors, peers to hold you accountable, an accountant and much more. If you do not already have a group of people in your corner, then there is no time like the present to get started. Reach out to your peers, other lawyers in your community, look for resources with your local Bar Association and find out who other successful lawyers turn to in difficult times.
Your team can help you to create, organize and manage planning documents. They can come in the form of a mastermind group, where you can share ideas of how to grow, get advice to help conquer the challengest currently holding you back, and hold you accountable to the goals you’ve set yourself. Most importantly, having this team in place helps you to know exactly where to turn to and who to call when the road gets bumpy, whether it’s due to a pandemic or just a bad quarter.
2. Believe in your plan
When things get tricky, it is human nature to retract and freak out for at first. But if you have faith in your plan then you can avoid this nervous breakdown. I addition to the plan, having confidence in yourself and in your team boosts everyone’s morale and will increase your chances of achieving positive results. Lower your stress, take your time in creating a foolproof and responsible plan, and then trust it. That way when things go south your prepared and know that you’re ready to act instead of sitting back and worrying about what’s next.
3. Save for a rainy day
We have all heard it before, but never underestimate the power of saving money away for a rainy day. Building up your cash reserves allows you to have the flexibility to respond to any kind of crisis. No one could have predicted that courts would shut down and pump the breaks on almost every ongoing legal matter in the country. But by building up reserves, you can be better prepared for the unexpected, especially if that problem is a long-lasting one that prevents any new funds from coming in.
4. Know exactly how much you need
Do you know exactly how much money you need to keep your practice running without having to make drastic decisions? Let’s be honest with ourselves though, most lawyers don’t have those numbers on hand. The best time to calculate your lowest possible operating costs is before a crisis. But the truth is that if you wait that long then it could already be too late. Therefore, a critical part of financial planning for any disaster is to be able to say what exactly you need for your practice to survive. Just like anything else, once you know exactly what you need, it is easier to plan for and achieve those needs instead of aimlessly going on hoping that you have enough to get by.
5. Have a “worst-case-scenario” plan
Most lawyers will have a worst-case-scenario plan. But during normal times, it probably isnt the most pressing item on your mind. If you have not done so already, review this plan and get all the necessary documents and signatures in order before the worst-case scenario comes up.
What are these documents?
These can include any document or guidelines in case the owner should fall ill, become disabled or pass away. Is there insurance that covers the law firm should these events come to pass? How are the bank accounts set up? If the bank accounts become frozen for some reason, do you have a backup or contingency plan? Is there a safety deposit box, are there multiple people who can access it?
You need to make a list of all the essential items that somebody would need to pick up the practice in a worst-case scenario, and then share it with a few other trusted people.
6. Review and revisit
When it comes to planning for a disaster, or even a planned event like retirement, it’s important to look ahead. Do your exit packages need revising because of Covid-19? Were you prepared before this current pandemic or do you need to make a new plan? Have you built up other assets and taken actions to protect against financial loss? Ask these questions, and develop a plan to change any undesirable answers. If you’re not prepared now then sit down and take the time to make sure you are for the future.
By following these tips, you can be more confident in your business decisions and that your practice is better prepared for the future.