New file openings crash but staff stepping up during crisis

McCrum: Get cash-ready

Many law firms are seeing the number of new file openings crash as the lockdown continues, but leaders have reported how staff are really stepping up their efforts, according to new research.

Fee-earner numbers and chargeable hours are also diving as firms are heading towards what could be a very grim month-end for April.

Law firm consultant Simon McCrum is conducting a weekly snap poll of firms to track how they are coping with the crisis – 15 firms, from small to large, took part last week. You can read our stories from the previous three weeks here.

Some of the firms reported huge falls in file openings – 80% in one case – although private client and employment in particular rose, and personal injury held steady too. Almost all the firms had furloughed fee-earners and, in greater numbers, support staff, and seen chargeable hours drop, again by up to 80%.

However, a private client firm recorded a 30% rise in chargeable hours, while a personal injury practice said the lockdown weeks have produced “some of the highest chargeable hours we have seen all year – there are less distractions and interruptions at home”.

Mr McCrum said that, whilst managing partners were worrying about these ‘hard’ indicators, they were also reporting successes in the ‘softer’, people areas “which will be invaluable when we come out of this”.

One said: “Some individuals have really come to the fore and go beyond the ‘call of duty’ to win new work, working unsocial hours etc.” Another added: “There is a very strong sense of unity with all staff joining our Monday morning Zoom chat.”

A third managing partner observed: “Some support staff and junior staff have been excellent and clearly demonstrated that they want to be retained. Some equity and salaried partners’ attitude and support to others has been astonishingly poor and this has been communicated to them very directly.”

Indeed, one managing partner described how their firm has “worked hard on culture and behaviours over the past two years”, and the lockdown has accelerated the process of “pruning” those who have not joined in.

“We are parting company with some partners who were not living out our behaviours or not performing. This is part of wanting to position ourselves for when lockdown finishes in as strong a position as we can, and our view is that it’s not the time to duck difficult decisions.

Another said: “The crisis has given us an opportunity to engage with everyone in the firm on ‘the business of law’ and I think for some the penny is starting to drop. I can’t wait to continue the discussion when we are all back and probably will be able to implement significant changes to make the firm more financially robust.”

Mr McCrum predicted that these discussions would “almost certainly include a re-think on the whole question of offices and premises, and of the need for secretarial support”.

He added that, with the situation only likely to worsen in the coming weeks if lockdown continues for much longer, the key was to get as ready as possible.

“Don’t gamble with your business. ‘Ready’ means cash-ready. Make decisions now and implement them now – in what may turn out to be calm waters rather than in the eye of a storm.”

To help law firms understand the Covid-19 crisis and its impacts, and to help them to respond, Mr McCrum is posting regular briefings on his website, giving out relevant parts of his forthcoming book, The Perfect Legal Business. You can also watch insight from him on coping with the crisis on a Law Society video published earlier this month.

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