lone tree on a winter morning

The closing weeks of 2014 are proving to be very challenging for many law firms, large and small, around the world. There are things that every law firm should do now so that it can manage a crisis if it arises, rather than try to rely on improvised responses.

A crisis can take many forms in a law firm.  

Some are external, such as the worldwide effects that are beginning to be observed from the sanctions regimes imposed on, and by, the Russian Federation.  (Imagine the challenge of maintaining profitability when your principal billing currency can devalue by as much as 20% in a single day.)  Others are internal, such as the increased vulnerability that some law firms have to the loss of major clients or the departure of some of their most productive partners as a new year approaches.  

Anticipation is everything.

If law firm partners adopt an attitude of "we will cross that bridge when we come to it," they substantially increase the risks of seriously adverse consequences if a crisis arises. Even if the preparation is only intellectual -- and in some instances that is the only preparation that is realistic -- knowing how your are going to manage a crisis is usually more important than what you actually do when the crisis arises.

Individuals and groups do not automatically perform well in a crisis. The image of the calm leader with flawless analysis and insightful decisions is a myth promoted by junk science and badly-written movies. In the real world, a crisis disrupts and distorts priorities, removes options that might have been available previously, and can be exacerbated by unrelated tensions and divisions in the group.   To hope that "we will somehow figure it out" might be courageous and optimistic, but it usually is also delusional.

3 starting questions

Walker Clark LLC offers a complete crisis-management service for law firms. Each law firm and each challenge are different, which is why we always take a custom-tailored approach that avoids generic "business school" solutions and emphasizes not only surviving the crisis, but emerging from it stronger, if possible. However, there are three basic intellectual steps that every law firm should take at the first suggestion that a crisis might be on its way, and, preferably, even before.

Ask these three questions:

  1. How will be defuse the situation as much as possible? Sometimes this means keeping a disagreement among partners from degrading into a "civil war" in the partnership.
  2. How will we mitigate any immediate and potential future damage, especially to our client base and market position? Firms that have a good understanding of their long-range strategic objectives usually do better at this.
  3. How will we stabilize the internal climate of the firm and promote informed optimism about its future? Telling the truth is usually the best damage control strategy.

As a short strategic exercise at your next partners meeting, or for several hours during your next partners retreat, consider these three questions in the context of a possible crisis in your firm, such as the loss of major client or an economic downturn in an industry sector that is a significant part of your client base. You probably will not be able to developall the detailed answers that you will need, because there are a number of factors that will be unknown at this time. However, even this brief exercise can give your firm an important intellectual "head start" on the successful management of the "real thing" if it ever appears.  

And that intellectual head start could make the difference between success and failure.

Norman Clark