Every single business, if it is around long enough, will face a time of crisis. Law firms are no exception.
Whether a series or a single event, crisis comes with a handful of pivotal moments. Mishandled, these moments can threaten the very existence of any organization.
If you’re managing a law firm you know that crisis moments are no respecter of size, history, or even the almighty Profits Per Partner metric.
Law firm crisis often sneaks up on you, emanating from any one or a combination of developments, including:
- Loss of key client(s)
- Loss of key lawyers(s)
- Loss of the ability to borrow
- Litigation against the firm (which mismanaged can precipitate the previous three)
The historical landscape of the legal profession is littered with firms that, facing crisis, were unable to navigate the unfamiliar waters . . . and are no longer with us. You know the names; and if you’re like me, the list still sounds surreal. Heenan Blaikie, Bingham McCutchen and the infamous Dewey Leboeuf.
These names captured our attention in large part because of their size and notoriety; but there are hundreds of other examples — less known, smaller firms that have suffered the same fate.
The truth is that some level of crisis is virtually inevitable — either as a result of management missteps or external influences. Doesn’t it make business sense for law firm leadership to proactively identify what can be done to maximize the probability of survival?
Like so many other things, preparation is the key to success. And though preparing for an unknown and unseen crisis may not be on the priority list for most law firm leaders, it should be on the list of all.
What Preparation Looks Like
The first step to proactive management of those moments that turn into a crisis is to have thought through who will be responsible for critical tasks — at least in general terms.
Here is an outline of key considerations as you consider taking steps today that will help you manage crisis in a way that minimizes the possibility of firm closure.
- Recognize that you have multiple audiences. Whether a crisis plan is in place or not, the law firm leader must recognize that there are three key audiences for any action taken.
- Internal (all lawyers and staff personnel), the audience closest to and most impacted by the crisis;
- Clients, who want to know first hand the status of their advisor; and,
- The public, which is always interested in a potential disaster.
- Engage key players – Whether you directly solicit their participation as members of the crisis swat team, key members of the firm (you know who they are) must feel like they are “in the know” and have direct and frequent access to leadership.
- Develop a plan – Response to the crisis deserves a prompt and carefully thought out plan. As addressed below, plan development almost always benefits from seasoned outside perspective.
- Communicate – A crisis needs a spokesperson — often the head of the firm — but the key is there should be one and only one voice. The rest of the firm should be aware that all inquiries are to be directed to that person for response. The spokesperson should communicate frequently with a confident, calm demeanor. Above all, communication should be honest. Don’t paint a negative picture. But don’t overstate expected outcomes. Unrealistic expectations are deadly.
- Seek outside help. Very few organizations are staffed with all the expertise necessary to plan for and execute a response to a crisis. This is not the time for learning on the job. When in doubt, reach out to external expertise that can help craft and guide the firm.
Has your firm thought through how it will respond to a crisis?