This is a guest post by Erik Pickering, President of Tracers.
Leading Your Law Firm During This Time of Economic Uncertainty
In a short amount of time, our world has flipped upside down. Terms like social distancing and quarantine have become part of our everyday language as schools, businesses and churches have shut their doors.
Running a law firm during this time, just like any business, brings with it a lot more questions than answers.
How do I stay afloat?
How long is this going to last?
What should I do with my employees?
None of these questions have a straight-forward answer. Each of them must be taken in context. However, there are guiding principles of leadership and decision-making, we can all use to manage as best we can during these uncertain times.
I say “we” because I’m going through it also. I’m currently leading a company with 40 employees and trying to think through all the possible scenarios in front of us.
Prior to coming on board at Tracers, I worked at Bridgewater Associates, the investment company led by Ray Dalio. Having worked at Bridgewater through the financial crisis of 2008-09, I’ve found myself drawing back on that experience in recent months.
In this article, I’ll share a few tips for leading a company during these times of uncertainty.
As humans, we fear uncertainty more than almost anything. When things are uncertain, we have a tendency to act emotionally. What we need to do is take a step back and evaluate the situation at hand.
That’s where a target is necessary. It’s possible you set a target for 2020 in your law firm. Maybe that target got completely changed in the last month. OK, let’s still look at the target. What changed? What about it is still relevant?
If things have changed dramatically, it’s time to reevaluate the target. Because of the uncertainty of the day, I find it helpful to create a goal for the best-case and worst-case scenarios.
Mark Cuban, who has been offering free advice for businesses during the last few weeks put it simply. “You have to hope for the best. Plan for the worst.”
This doesn’t have to be a long process. The real goal is to get to work, taking action toward the goal. So, take some time, recalibrate and pick a new target.
With a new target in place, the next step is to build a plan to hit the target. Again, we have to plan for the worst case, so I would recommend looking out 12 months.
In planning, that’s where the goal becomes tangible. Your plan should be data-driven. This requires getting honest with your numbers. You should be able to answer questions like:
How much cash do you have on hand?
What is your projected monthly cash burn?
Based on that trajectory of cash burn, you can determine how much time you have before you need to do something drastic.
If you are low on cash and burning it quickly, you’ll need to immediately look at your expenses and what can be done to stop the bleeding.
If you have some reserves built up, you can be a bit more measured in your approach to get on track over the span of several months.
Your plan will be determined by data, not emotions. Make sure you are not reacting, but working through reality.
Gathering perspective is critical now, more than ever. Once you’ve created your data-driven plan, it’s important to bring together your leadership team or a trusted advisor just to simply talk through what you are thinking.
This will be helpful because the reality of the situation is you’re probably going to have to make trade-offs. But all trade-offs are not created equal. If your number one priority is to make sure you keep all your employees, you’ll have to be creative to find ways to make that happen.
When you have a data-driven plan, you can now compare scenarios. It’s usually not an either-or conversation, but an if this, then that. Forecast your different scenarios, so you can make peace with the best possible decisions.
After setting your path forward, it’s time to get moving. We are all fighting fear during this time, and the best antidote to fear is movement. When you are making things happen, you can create your own momentum and reduce anxiety.
Some actions you can take right away:
Scrutinize your expenses: What are you currently paying for that could be discounted or removed? One positive of this experience should be to help us all eliminate waste. Everything should have a distinct purpose. If it doesn’t, cut it.
Analyze your revenue streams: As things are changing, you need to know where your money comes from. You may have part of your law practice that’s going to slow down, but another that will pick up. Unfortunately, in 2008-09 bankruptcy attorneys were very busy. Where is business likely to come from? Maybe you can shift some of your marketing toward what’s most likely to produce revenue.
Understand the stimulus: Governments are working to free up money to help businesses just like yours. Make sure you understand what your options are for your firm and your employees.
Engage your clients and prospects: Don’t be timid during this time. Engage with your network. People will pay for advice, and attorneys are there to help advise. It’s a time to engage. Maybe you can do a proactive discount or something similar to generate cash and provide value.
Don’t get stuck in a paralysis of analysis. Take action, even in the midst of uncertainty, and you’ll start to find a path forward.
Things are going to change every day. That doesn’t mean you abandon the plan. When things change, come back to the plan and make adjustments. The great part of a plan is it helps you see a bigger picture, rather than reacting to everything that comes.
As a leader in your law firm, the best thing you can do now is make strong, rational decisions. By using this process, you’ll be able to keep moving forward and give your firm the best chance to come out of this current situation stronger than before.
Erik Pickering is President of Tracers, the trusted research partner for legal professionals.
Erik has over 25 years of experience in running and growing businesses. As President of the Consumer Division of First Advantage Corporation, he ran two data business units: US Search and the Home Owners Club. At Bridgewater Associates, the world’s largest hedge fund, his responsibilities included research data operations, trading desk oversight and company-wide security. Prior to that he also worked at Amazon.com, Booz Allen Hamilton, and Procter & Gamble. He earned a BS in Mechanical Engineering from University of Washington, and an MBA from Harvard Business School.
To learn more about how Tracers helps law firms, check out https://www.tracers.com/en/legal-solutions/
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