Dealing with the Corona crisis: first experiences from our consulting work

What law firms should do now!

By Christoph H. Vaagt, Law Firm Advisor, Munich

Many law firms have switched to crisis mode. The changeover to home office has worked well for most of them, also thanks to their existing IT systems. For those who had not yet created a connection to the law firm software, this is now the focus: those who have an SaaS solution, such as Actaport, are well served.

What is important now?

    1. Liquidity: maintaining liquidity is central.
      1. Important: Create payment forecasts for the next 6 months on an Excel basis: when will what be received, what is due when, what can be postponed?
      2. Open items: speed up the process by having partners remind your open items with the help of a pre-formulated mail, in which there is a payment deadline, combined with support during this important time!
      3. WIP/semi-finished work: Settlement of time not yet invoiced or fees due even before the mandate is completed. Always combine an invoice with a friendly letter in which the following is stated
        1. What it’s all about
        2. What was done (important: special challenges mastered, good opportunity for self-expression!)
        3. With what success (short/medium/long-term) from the customer’s point of view
    2. taking advances: especially in the case of urgent requests from new clients
    3. Turnover: Now the lawyers are (finally) sitting on the longer lever again: so hourly rates up, advances, short payment terms or even special bonuses!
      1. In law firms, some departments are now concerned with dealing with the many inquiries, and client creation and time recording are now central. Of course, we also agree on the highest hourly rates: now clients do not negotiate the fee.
      2. For patent attorneys, the number of new contracts in consulting/drafting is now decreasing. Due to the long periods of time over which payments are made (especially the Japanese), this does not affect liquidity by a long way; on the contrary, the payment terms are now an advantage because they represent a buffer. Here, too, the following applies: whoever wants to be served must feel that the negotiating power now lies with the law firm; so now is the time to renegotiate well. Since many clients still want to realise the lower fees at the EPO (the changeover is on 31.3.), it is possible to take surcharges, and thus show what it is like to have the longer leverage (how long before the clients)
      3. Auditors are now actually having the hot months of preparing the annual financial statements: in terms of capacity, hardly anything is possible any more! But special orders at special conditions can of course be accepted with free capacities to increase profits.
    4. Costs: reduce variable costs!
      1. Reduce variable costs: these are mainly training, and (simply!) travel expenses. Don’t think about personnel first, but reduce costs at your partners, including withdrawals, so that the employees notice that you are starting with yourself!
      2. Fixed costs: this is where zero-budgeting helps: if a cost item is eliminated without the core service suffering, it probably wasn’t that important!
    5. Marketing / Communication: Now is the time to show what you can do!
      1. Lawyers advise: they reduce complexity and can give quick instructions for action. Now the good advisor proves himself!
      2. You haven’t been in contact with many clients for a long time: now is the time: and so be it: We are there for you when it counts! After that, there must be information that clearly helps the client. After that, a reference to the service portfolio may follow.
      3. Timeliness / Frequency: Since events rearrange themselves almost every hour, every communication must sensibly reflect the current events. However, panic communication must not take place. The frequency should be kept as low as possible. For this purpose, the important points of current developments must be filtered out.
      4. Some government agencies are either stopping negotiations or are unable to react: in other words, all time-critical mandates that are affected by this should be dealt with in terms of communication. What happens next, what can we do? Brief indications are sufficient.
      5. Use planning: This is no time for actionism, but for planned activities.
      6. Explain: Write to your clients, what you do why! Explain the procedure, because the costs that are produced now are seen under completely different aspects than before the crisis. The question that needs to be answered is: Does it really have to be done now?

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