Covid-19’s harmful impact on some law firms shows in reduced client demand, delayed or reduced receivable realization, and production inefficiency. While those consequences may be understandable in light of the pandemic, third parties that expect fulfillment of promises and obligations may not be totally sympathetic. Some grace may be extended, but it is neither assured nor certain to be long-lasting. If the firm’s struggles are not remedied quickly, a firm can find itself in serious trouble.
Faced with the unanticipated crisis, law firms must move quickly but wisely. Almost always the essence of the challenge can be traced to financial pressure. For that reason, job No. 1 often involves developing a financial plan that confronts the crisis. The financial plan has importance on multiple levels. For one, it acts to correct the problems that undermine the performance of the firm. On another level, a sound financial plan that can be believed instills confidence within the firm and without. A logical financial solution can reduce internal worry and help relieve pressure from third parties questioning the firm’s future.
Good leadership also avoids straying from tried and true behaviors. Rather, building the crisis solution plan around core competencies-things that have held the firm in good stead in the past-is the wise thing to do. By playing to its strengths, a firm seeking to recover from setbacks can use its experience with past success to calibrate its performance through the restructuring period. Foundational conduct by familiar people will produce understood and trusted data that can guide leadership in overcoming crisis.
Managing crisis is helped if these two fundamentals are observed
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To read more on leading through law firm crisis, visit Managing Law Firm Transition.