Leading in a crisis
Earlier this week I moderated a couple of virtual meetings via Zoom with around 24 leaders from small to mid-sized law firms New Zealand and Australia (15 – 350 staff range). On both meetings, I was also joined by Sam Bassett, Director of Accountants Moore Markhams in Auckland. He has a significant client base in the legal sector in New Zealand.
Here is a summary of those discussions.
Overview
The main challenge for all firms at the moment is business continuity. Some firms appear to be riding out the storm quite well, while others may be struggling to maintain momentum or are facing a downturn. Over the past three weeks, firms have transitioned from a reactive/panic mode to a proactive/planning mode. Firms reported many positives to have come from the disruption, particularly among their teams who have adapted well by being kind, open-minded and supportive. Some leaders have reported that the lockdown has even brought about beneficial and potentially long-lasting change.
Priorities
The main priorities for firms have centred on cash flow, communication and colleagues. These are discussed in more detail below.
Cash flow
Many firms are keeping a keen eye on cash flow. Most appear to be in good shape until June by when the effects of the lockdown will have kicked in. Some key points:
▪ Cash flow is increasingly becoming a concern for many firms;▪ Some firms (in New Zealand) have taken advantage of the Government wage subsidy while others have yet to decide whether to apply;▪ Some firms have been able to negotiate a rent reduction with their landlords, reporting immediate reductions from 50-100%, while others have received no concessions at all;▪ NZ firms are being encouraged to make their GST and provisional tax payments on 7 May if they are able to.▪ Some firms are reporting a reduction in new matters (up to 50%), a reduction in working hours (20-25%) with a similar reduction in salaries/drawings.▪ The Law Society of New South Wales has cut its membership fees from $410 to $10 for the 2020-2021 year. Questions were raised as to whether the New Zealand Law Society would reduce practising certificate fees or allow monthly or quarterly payments to improve firms' cash flow.
▪ Cash flow is increasingly becoming a concern for many firms;
▪ Some firms (in New Zealand) have taken advantage of the Government wage subsidy while others have yet to decide whether to apply;
▪ Some firms have been able to negotiate a rent reduction with their landlords, reporting immediate reductions from 50-100%, while others have received no concessions at all;
▪ NZ firms are being encouraged to make their GST and provisional tax payments on 7 May if they are able to.
▪ Some firms are reporting a reduction in new matters (up to 50%), a reduction in working hours (20-25%) with a similar reduction in salaries/drawings.
▪ The Law Society of New South Wales has cut its membership fees from $410 to $10 for the 2020-2021 year. Questions were raised as to whether the New Zealand Law Society would reduce practising certificate fees or allow monthly or quarterly payments to improve firms' cash flow.
Communication
As one Partner suggested, ‘communication is king right now.’ Thanks to a variety of technologies, communication in firms, both internal and external, appears to be going very well, and in some cases even better than before the lockdown! Firms are using a variety of tools, including Microsoft Teams, Zoom, WhatsApp, Jabber, and Slack for team meetings, private internal communication, client meetings and social get-togethers. Most people have been quick to adapt to using the technology though one firm reported that its older lawyers have been struggling to get up to speed!
Colleagues
All colleagues are now operating from home. Some have seen a dramatic reduction in work while many others are as busy as ever! In spite of this, firms say that working from home has gone better than anticipated. Generally, their teams are in good spirits and have responded very positively to the enforced change. In spite of the slowdown, no firms reported redundancies or furloughing of staff, although some firms have implemented 4 day weeks. As one Partners said, ‘no one will suffer if we can help it.’
▪ Nearly all firms reported that their people have been kind-hearted, mutually supportive and adaptable;▪ Some lawyers who have become ‘redundant’ as a result of work drying up are being redeployed; for example, one firm has redeployed some lawyers to work on the firm’s business development and marketing while another has seconded some lawyers to work with clients;▪ Many lawyers now need to think more like entrepreneurs and less like lawyers; some firms reported how the crisis has exposed a leadership vacuum in their firms and highlighted the need for leadership tools.
▪ Nearly all firms reported that their people have been kind-hearted, mutually supportive and adaptable;
▪ Some lawyers who have become ‘redundant’ as a result of work drying up are being redeployed; for example, one firm has redeployed some lawyers to work on the firm’s business development and marketing while another has seconded some lawyers to work with clients;
▪ Many lawyers now need to think more like entrepreneurs and less like lawyers; some firms reported how the crisis has exposed a leadership vacuum in their firms and highlighted the need for leadership tools.
Impact on practice areas
Commercial property, employment, family and relationship property lawyers appear to be busy while residential conveyancing, commercial and some litigation work has stalled.
My thanks to those who have participated in the discussions to date. Further meetings are scheduled in early May. I will follow up with another summary following those meetings.