Covid-19 Actions and Considerations for Law Firms Detailed Analysis and Guidance
We are now 2-3 weeks into the COVID-19 crises and a week into more stringent isolation rules and a significant amount of action has been taken by law firms.
The following paper sets out the actions that firms should consider as part of their business continuity strategy and programme, whilst the COVID-19 crises continues, and the industry settles into new ways of working.
In this paper, The Strategic Partner (TSP) discusses a range of topics that we hope will provide you with areas your firm should be considering and discussing, both now and into the future.
To Download a printable PDF version, please click on the link below:
Covid-19 Actions and Considerations for Law Firms Detailed Analysis and Guidance
2. Regulation & Risk
As a law firm, you will be fully aware of the regulation that is required by the SRA. It is simply not possible to allow a lower threshold to be applied, as this will go against the Principles by which law firms are regulated. Therefore, regulation applies, and it applies in full.
The SRA have issued a statement (https://www.sra.org.uk/sra/news/coronavirus-update/) in which they expect firms to have business continuity plans in place, to provide the high standards of service that the public expect. They expect you to follow their principles which includes serving the best interests of the clients and upholding the rule of law.
They have said that they will be proportionate and take current circumstances into account and will take a view on when people are trying to do the right thing and those that are not.
Fundamentally, this is going to come down to protecting your clients’ interests and communicating with them.
You should be letting clients know how you are operating and any restrictions or changes in approach that they need to be aware of.
Another fundamental element to stay in control of is data protection and confidentiality. The duty to protect clients’ data and their information does not change because your working practices have changed. With staff having access to client files at home they must be protected. Not everyone’s working environment will be as secure as the office space provided, but that does not change responsibility. You must remind your staff of the need to maintain confidentiality and give them guidance on behaviour that is acceptable and not acceptable.
Re-assess risk and data protection, record this on your COLP folder and communicate with your staff.
Similarly, your Professional Indemnity Insurer will expect you to maintain risk management controls within your firm. You cannot allow your risk assessment and supervision to suffer due to remote workings. Firms must ensure staff are fully aware that the same processes and procedures apply, and they must be given access to supervisors to ask questions and gain advice.
As noted above, it is imperative that your risk registers are kept up to date and those matters categorised as high risk are recorded and monitored. In these changing times the firm may want to reassess what will be classified as high risk and update their policies to reflect this. For example, a matter where you have not been able to complete the full Client Due Diligence (CDD) process but are continuing to act.
Some of the elements to consider as part of the overall infrastructure are as follows: -
Decide on your direction of travel and achieve it – If you have not already established how your firm will operate in the event of no access to the office, decisions will need to be made quickly. This article is being written several days after the Government have announced that only essential travel to work should be undertaken, so most firms will have decided on what options are available to them and have implemented most, if not all of their strategies.
The New Normal - Businesses will adapt and you need to be ready as and when your clients and potential clients are ready to re-engage. In the same way that your firm is adapting, you can expect your clients to do likewise. Every business wants to achieve the same goal, which is to continue to provide services to their customers and adapt their ways of working to achieve that goal. Industries will find a way and firms can expect to see engagement. You will need to be ready to receive your clients’ instructions and provide services to them. Preparation and being ready will ensure that your firm is able to continue and generate income whilst the current crises continues.
Post – Can you access the office and if so, do you have the facilities to scan the post and send to the case handlers? If so, then this is the best and only solution to ensure post is able to reach the intended recipients.
If you cannot access the office, can you divert post to an individual who can then scan and email documents? This may not be an option for some businesses particularly if you are in a multi occupancy building. Therefore, you are back to the option of visiting the office to collect and scan post while you seek, as best you can, to move communication to electronic.
E-mail - You should also be encouraging clients to use email and where possible, to send and receive documents via email. If a client does not have an email address it may be possible for you to help them set up an email address, if needed with one of the free platforms such as Gmail.
Most services can be provided remotely through online resources and most firms report that the majority of their communication is now online. Therefore, the amount of post received should not be significant, but the size of the firm will also dictate how much post is received across multiple client matters.
The ultimate goal is to minimise postal communication, it is expensive and inefficient and whilst some documents must be sent by post, the majority do not and with new ways of working affecting everyone, it will be possible to ensure most people are using email as the primary communication tool with post as a back-up.
Do not forget that large files can be compressed to make them easier to send. The following link explains how this is achieved: -
E-signing of Documents – Consider using electronic signatures for the obtaining of signatures on documents. This a widely accepted method of signing documents. It is efficient and cost effective. The following article provides more information on the benefits of using electronic signatures:
The Strategic Partner recommends Rubix Sign: -
a. Rubix Sign (https://www.rubixsoftware.co.uk/Products/Signable) can be installed on a permanent or temporary basis.
b. Set up fee is £150 plus VAT (inc 5 users) each, additional users are £10 per user.
c. Each envelope is 50p, an envelope can contain multiple documents and signatures.
This is based on a web portal where you will load the documents. Rubix will set up your log ins and profile as part of the set-up process.
As a law firm, you have a duty to: -
1. Establish with clients that you can continue to work – Establish with clients that you are open for business. Assess their legal needs and if the reason for your instructions remains live and you can still provide advice and take action, a client should not disengage. You may need to educate the client on what you can do and you need to speak to them to confirm how you can continue to deliver your services and give them the confidence to continue, even if this does require news ways of communication.
Assess what notifications you have sent so far to your clients and what you intend to send, to provide them with the confidence that they need so that you can continue to represent them. Messages are more personal if you call clients first and then follow up with an email.
2. Clients who cannot engage – When the work you are doing for a client is frustrated, stop and tell them that you will not be acting, why you will not be acting and when you will be able to assist them again. It is important that you talk to your clients so they understand what you can and cannot do and prevent them from going to other law firms for advice.
3. Meetings with clients – Some clients may be willing to come to your offices and others will not for a variety of reasons, from being vulnerable through to self-isolation. You need to be able to offer flexibility to your clients be that by phone, conference call or video. There are solutions and firms are starting to embrace them and should continue to do so.
4. Cancellations – Do not just accept cancelled meetings. Clients may not be aware that it is possible to still have a meeting with you. It is easy to create video facilities and with a significant number of people having smart phones, tablets and laptops, they all have a video call function. It is more professional to use PC based software as opposed to phone handsets but if that is not available, it is a good alternative.
It is easy to create a Zoom account, there is a cost of £11.99 for the pro version or free for 1-2-1, but it is limited to 40 mins per call. If your firm already has Microsoft Teams this platform can be used and is also part of your licencing so is effectively free (or already paid for).
5. AML and CDD – You cannot allow your AML process to deteriorate as to do so will put your firm at risk. You must ensure that you apply full AML for both new and existing clients: -
a. Clients can scan and send you ID and poof of address.
b. Set up online checks for clients.
c. Make use of video facilities to complete ID verification.
If part of your CDD process is to meet clients, ensure that you mark files to identify that you have not fully completed CDD in accordance with your process and register the matter on your high-risk list. This is pertinent for clients who have not instructed the firm previously.
Website - Update your website with a page dedicated to COVID-19 where you can place updates. This could be a button on your site or hosted in your news section. Ensure people can get information on what you are doing, how and why.
Many firms are using the downturn in activity to review their websites to ensure the content is up to date and relevant and the overall site is presenting the firm properly. In addition, ensuring the site does not have errors is a sensible task to undertake.co
Websites are a window into the firm and it is essential that a site is well worded, optimised and structurally sound.
If further advice or guidance is needed on how to ensure your website is working for you and up to date, The TSP marketing team can provide advice and are providing free consultations to law firms.
Marketing – The current crises has changed the way we work and has changed the services that can be provided or are being sought. There are certain services which simply cannot progress at the present time such as property. Firms should consider switching marketing and advertising budgets to services that are still required such as:
- Contested Probate
- Lasting Powers of Attorney
- Employment Law
- Landlord & Tennant
It is also important that firms are aware of changes as they happen. Markets will find a way of adjusting to continue their business and industry and firms should be ready to respond to the need for the services returns and arises. Firms will need to consider their own resources and in particular consider their staff, particularly if they have been placed onto a furlough status.
Presence – The target market for many law firms is localised with even larger firms having multiple offices in regional centres, from which they service local people and businesses. It is important for firms to continue to support their client base and they can do so by demonstrating that the firm has responded to the current crises and is available and ready to support them when they need it. This is an important time to show support for the local community and continue to foster relationships with clients and local businesses, through staying in touch with them and offering support and guidance where you can.
6. Systems and Technology
Across the market there is a significant variance in how firms have embraced technology, much of which is dictated by how traditional the firm is, how staff will engage with it and also the budgets that have been available for the implementation of technology.
There is no doubt that the firms who have moved into a more paperless environment with remote working as part of their culture will have been better prepared, but those firms who are not as advanced from a technology perspective will now be considering their options and what is available and what can be implemented.
It is important, as these new ways of working are introduced to firms, that decisions can be made on maintenance of such developments and how and if they can be used into the future as part of the way the firm is structured and provides its services.
For those firms who have structures in place, this has been a test of the resilience of the IT infrastructure and in real time, firms will have realised how they can and have coped in a crises and where and how systems can be improved.
There are a number of areas that firms can consider but we have highlighted below those which are not complex to implement and support new ways of working : -
Paperless – Can you create a paperless environment and has this been considered. It may be too late to implement a paperless solution if the firm has not already engaged with this, but the current crisis is demonstrating how firms that have embraced such technology will function more effectively. TSP are discussing with providers on whether paperless solutions can be installed during the crises period and further information will be provided in due course.
There is no doubt that paperless environments are more efficient and save money for firms. Often the reason for not implementing this is a firm cultural issue or a resistance to change. The current position is forcing change as the moving of paper is proving to be more difficult than ever and more expensive.
The crises will be driving firms to consider their stance on paperless and the benefits of brining this into the firm as part of the ongoing strategy.
Case Management – Whilst most firms have a case management system, there are still many that do not and remote working and supervision is almost impossible without having a central database of client information which staff can access and interact with.
If a firm does not have a case management system, or their chosen system cannot be accessed remotely, there will be extreme difficulties in being able to provide services and maintain the firm without being able to access and work from the premises.
Case Management Systems provide firms with control through a centralised platform where all cases can be held and accessed. This is not about building workflow systems that drive and predict a case’s journey, this is about brining control into the firm or making the most of what is in the firm to manage, supervise and control.
Whilst implementing a case management system in the short term will not be achievable, firms who do not have the appropriate system for their firm to function or a system at all, should start to consider this as the longer the crises continues the harder it will be for the firm to continue.
Whilst increasing spend at this time may be counter intuitive, it may be a spend the firm needs to incur to continue and this is certainly an aspect that would justify access to government funding, as investing into the infrastructure of the firm should be encouraged.
Whilst it is accepted that this is not an easy decision, the following paper will provide some guidance on firms who may be looking at their Case Management System solutions and questioning their effectiveness or those seeking to implement this for the first time. To read the paper on Case Management Selection, click the link below:-
Post & Print Solutions – Sending letters will become more of a challenge the longer that people work from home. It is not practical to expect people to send their own letters and they may not even have the right facilities. Whilst it is expected that most people and businesses will move to email and other forms of online document sharing and signing, there is still the need to print and send documents and letters. The longer the home working (and isolation continues) the more problems will be created by not having a print and postage facility.
Considering centralised print solutions is an option whereby a firm can arrange for all printing to be directed to one place and letters are dispatched from this location. This technology is NOT new but it is not as well embraced across the industry as may be expected.
Companies such as ITEC (https://www.itecgroup.co.uk) provide firms with a complete outsource printing solution which will solve the issues for firms who have not or cannot create a central print environment. Outsourcing of this functionality is often more effective, as outsourcing to a specialised business ensures there is integrity of service and confidentiality concerns are minimised.
Video Conferencing – There are a wealth of systems and apps that are available to firms to use for video conferencing with clients. Almost every firm we now speak to have engaged with some form of video conferencing technology to communicate with staff and clients.
TSP has started providing training via video facilities and the results have been positive.
Video conferencing is already becoming a normal way of communicating and those that have previously been reluctant to embrace this have found themselves using the facilities with relative ease.
There is etiquette to consider when using video conferencing, remembering that if you are set up at home that you are giving people a glimpse of your environment, so be careful to ensure that you are presenting yourself and your environment as professionally as you can.
Etiquette tips for you to consider: -
- Dress appropriate to your audience - If you are expected to be in business attire, make sure you are. If the meeting is more relaxed, then casual will work.
- Don’t be late – It is easier to be more relaxed about timings but there is nothing worse than waiting for a colleague to turn up and this will frustrate other attendees.
- Set an agenda – Unless this is an informal catch up, set an agenda and treat the conference as a normal meeting. Make sure there is a chair who controls the timings and does not allow the meeting to drift.
- Do not disconnect – Disconnecting disrupts the meeting – use the mute button and if necessary, move away from the camera.
- Use the mute button – If you are not speaking and there is noise, or you have to take a call you do not need to switch off, just use the mute button. Even better, before the meeting starts let people know you may have to take a call or the children are home so if you go on mute they will understand the reason for this.
- Respect others – As in any meeting, give people time to speak, it is bad enough when 2 people are talking in a face to face meeting, it is disastrous in a video meeting. Find a way of making sure you get your point across and you partake in the meeting without multiple people speaking at once.
- Stay in one place – If you are using a mobile or laptop do not be tempted to go for a walk. Moving attendees and changing environments can create distractions. It is better to ‘stay put’.
For those with access to Microsoft Teams, this provides an easy to use and free platform for conference and video calls. As already referred to, it is also easy to create a Zoom account, £11.99 per month for the pro version or entry level is free but limits each call to 40 minutes.
Communicate – As obvious as it may sound, people will be worried about their future and the firm. It is important to stay in touch with your staff at all levels to keep them updated on what is happening. Organise team meetings via phone or video conference or where this is not possible, send a group email update. Ensure your managers are up to date so they can update the staff or if you are the manager, meet with the staff and update them when practical. Communication will increase loyalty and people will feel valued.
Use your Resource effectively – If you have staff that are not going to be fully utilised with their usual role but you cannot furlough them (see below) consider what tasks you may have in the business that in the ordinary working environments gets left behind or not tackled. Can you ask these staff to work on aspects such as:-
- Content for marketing campaigns – writing documents and blogs to support communication of the firm and messaging.
- Reviewing your website content as referred to in the marketing section above.
- Considering your Case Management System and changes that are needed.
- Building of or updating workflows that can be programmed into your current system to make working practices more efficient.
- Updating processes and procedures within the firm (such as the office manual).
- Start to complete the applications that you know are approaching such as, PII, Lexcel, CQS etc.
- Updating and reviewing your internal training packages.
- Revisit your forecasts and projections and update them.
- Consider the firms overall strategy for the future and plan for your next steps. Firms will adjust and return to normal in time and planning will provide a clear path.
There will be tasks that the firm has which will fall to one side as running the firm and servicing clients take priority. If you have additional resources, now is the time to use it.
Furlough employees that cannot work or have no work – The Government has clarified the rules on Furloughed employees https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme. There are many resources available advising what actions firms must take across the internet but a brief summary: -
- The scheme applies to all employees who were employed prior to 28.2.20 and working i.e. not already on unpaid leave prior to this date.
- The scheme will apply to any employee furloughed from 1st March 2020.
- Employees on sick leave can be furloughed after the sick leave ends.
- You must confirm in writing that the employee is on furlough status as evidence of commencement. Keep the facts and make it clear.
- Staff you need to furlough must agree to a variation in their terms of employment.
- Once agreed and they are placed on furlough they cannot undertake work for the firm.
- The period of furlough must be for a minimum of 3 weeks. You can remove an employee from furlough and put them back on furlough as long as the minimum period is 3 weeks per arrangement.
- You can claim 80% of an employee’s regular salary up to £2,500 per month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.
- You must pay to the employee the 80% (or £2500 whichever is the lower) funding from the government and you choose if you want to make up the remaining 20%.
- Tax and NI must still be paid in the usual way.
- It will be for you to calculate what you claim and the claims must be submitted via a new portal which will be available by the end of April 2020.
- HMRC have made it clear they will audit claims in the future.
How to Furlough - In relation to when and how to furlough this is often a difficult question. The process is relatively straight forward. You need to speak to your employees, explain why there is a need to be furloughed and seek their agreement. Most, if not all will agree. The alternative is redundancy if they do not agree. Once you have an agreement, put this in writing setting out the following terms: -
- They are on furlough.
- Their salary will cease during this time BUT the firm will reclaim 80% or up to £2500 and this will be paid to them in the usual way through the PAYE system.
- Whether you will top up the payment to 100% of salary or not.
- You must also set out that they cannot work for the firm in the period of furlough.
- Tell them when you will review the position and what you expect of them during the furlough period i.e. a touch base call weekly etc.
When to Furlough - Deciding on when to furlough is more difficult in light of the rule that they cannot work for the firm.
Firms should start a process of identifying staff who are in similar roles or have the same skill set and assess the amount of work in the business that matches these skill sets. As the outstanding work begins to reduce, staff can be placed on furlough on a priority basis. Firms should build a list of staff that can be furloughed and when you anticipate this will occur.
Establish which staff can cover for others whilst they are on furlough and take on new roles as part of their current position. For example, we are seeing fee earning staff taking over inbound call traffic enabling the firm to place some front-line staff onto furlough.
Just in case, document your decision-making process to demonstrate that you have applied a fair approach.
On an ongoing basis, you must track your outstanding work, the hours being worked and the need to trigger the decision on furlough status for individuals.
This is a question of understanding your staff, your business and the work you have to direct the resource you need to manage that work.
It is imperative that firms bear in mind that businesses are starting to find new ways of working and the industry and people are responding. Engagement will recommence so it is important you have the resources available to provide services as work starts to increase. Firms are already reporting that this is occurring (remember that if you remove an employee from furlough within the 3-week minimum period you cannot make the claim).
For those staff that you need full time they will stay as they are. For those staff that you only need part time, a conversation and special arrangement will need to be made with each of them to see if you can agree to a reduced salary to reflect the time they work. Whilst some may not agree to this many will, as they realise that there are times where sacrifices need to be made.
8. Fraud & Protection
On 27th March 2020 Action Fraud reported notification of over £1m of cyber fraud since the start of the COVID-19 crisis. Please refer to our specific paper dealing with fraud, scams and protecting your firm. This is a detailed walk through of some of the issues each firm should be considering at this moment in time.
We are already seeing firms approaching us to confirm they have been the victim of fraud and scams with increased cyber threats. It is important, as highlighted in the article (link below) to retain your security systems and processes and be extra vigilant.
Finances, amongst the other challenges each firm and business has is by far the most serious and complex. This article does not seek to provide the answers as that is not possible but without referring to finances, the article would not be complete.
The steering of a business through this crisis from a financial position is easier said than done but one thing that is true, is that businesses will find a way to survive and firms need to do likewise. As clients start to re-engage, income will start to return and firms need to be ready to provide those services. That will only happen if decisions have been made and planning carefully thought out to survive through the crises and come out the other side.
Cash flow – It goes without saying that cash flow is an important consideration and managing cash at a time of crises is more difficult. Help has been made available by the government but the cash available from such schemes are unlikely to arrive until the end of April if not later. The firm will need to continue to meet its liabilities, but it will be necessary to prioritise who will be paid and when.
If you are not going to be able to make a payment, ensure the recipient is aware. If you do not tell people what is happening, they will not understand. As difficult a conversation as this, maybe it is better to have it than to not. There is undoubtedly more understanding at this time and keeping other businesses updated on payments due to them will aid this.
Understanding your liabilities and when payments are due is an essential step to take to enable a cash flow forecast to be established. You will need to make assumptions on monies due to you as other businesses will be doing the same. You know what you will need to pay but it is far more difficult to confirm what will be paid to you. You will need to use your judgement and adjust your plans as your own incoming cash becomes clearer.
Expenses – Reviewing expenses and deciding on essential spend is of course important but it is equally important to not cut from your expenditure aspects that you need for the firm to continue to function. Of course luxuries are going to be pushed to one side for now and help is coming in the form of government assistance and whilst it is acknowledged this will not replace the income that firms risk losing due to a reduction in instruction, firms need to evaluate to survive.
This is a question of reducing what is possible and retaining or negotiating payment terms on what you need. Some protection is being offered in terms of VAT rent, etc. and they will release cashflow to enable the firm to continue to function.
It is important that firms do not take expense cutting too far. They must balance their income and expenditure to facilitate the ongoing provision of services and remain acutely aware of spend and that it is allocated to keeping the firm running in the most effective way possible.
Facilities/Banking – Be ready to approach the banks for loans through the Government Business Interruption scheme. The application process will require significant information to be shared with funders and if you know you are going to apply, start preparing. Any typical lender will require, as part of a loan application the following:
- How much you need and what it will be used for.
- Proof that the business was viable before COVID-19.
- How COVID-19 is affecting the business and what changes you have made.
- Details of other loans and borrowings and whether you are meeting the repayments.
- Cash flow forecasts and available resources and how that has changed as a result of COVID-19.
- Whether you have any debts and in particular, HMRC debt that predate the COVID-19 crises or litigation that has been commenced for non-payment.
- The last three years accounts and up to date management accounts.
- Forecasts and plans demonstrating how income, cash and expenses will project into the future.
- Debtor and creditor lists and identification of bad debts.
- Details of any business interruption facilities that you may have in place.
It is of course important to understand when making use of facilities, whether the monies are grants and do not need repaying or when they will be repaid. Firms must be careful not to incur liabilities and debts that they simply will not be able to meet into the future. Keep track of the payments you are deferring and the terms of repayment, so that you can plan these in your forecasts.
As always, our focus is to provide sensible and practical guidance and knowledge for the benefit of our member law firms and the wider market.
We are also offering our member firms the opportunity to undertake a free consultation to discuss any issues and concerns they may have. If you are not a member and would like to enquire how to become a member please contact us.
For more information on the free business consultation, click the link below: https://www.thestrategicpartner.co.uk/Blog/PostID/812/Title/Free-Business-Consultation-for-our-Members
If you need to contact us for any reason you can call us on 0203 911 9710, email us firstname.lastname@example.org or visit our website (www.thestrategicpartner.co.uk) to make an online enquiry.