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Law Firm Survival Post COVID-19: Some Perspectives

According to the survey conducted by the Malaysian Bar Council, participated by 844 respondents on the implication, for law firm owners, of the Movement Control Order (MCO) emanating from the COVID-19 pandemic,

‘80.9% of respondents did not expect to make it past 3 months; cumulatively, 96.4% of respondents did not expect to make it past 6 months’ while only ‘a minority of respondents indicated that they would remain sustainable beyond 12 months’.

Although the results of the survey may appear quite worrying or troubling, COVID-19 undoubtedly has posed problems to businesses, enterprises, including law firms on an unprecedented scale, affecting most of them adversely, in operations and financially.

Any business or entity needing to survive the ordeal or the havoc wrecked by COVID-19 should adopt extraordinary strategies to survive and prosper. Below are some of the perspectives on how we believe a law firm can survive the COVID-19 pandemic:


1. Ensuring survival plan of the firm

Each firm must first craft a strategic plan to survive the COVID-19 pandemic. The strategic plan must be well thought of, resolved on and implemented swiftly. The firm must strategize for itself to continue to exist to fight the battle for another day. Action plans must be crafted very quickly in order to ensure that the firm does not go under water. The survival plan of the firm must include making sure that it remains intact post pandemic, does not suffer any loss of talent, no loss of clients and no major drop of revenues. The whole objective is to ensure the firm’s survival. The objective is to ensure the firm’s survival beyond the COVID-19 pandemic.


2. Forefront of the firm’s leadership

The firm’s leadership has to effectively deal with the pandemic crisis to ensure the firm continues to remain relevant.

The leadership responsibilities include, crafting short term and long term strategies, securing the partners’ buy-in, securing the employees’ buy-in, and to put in place mechanisms to execute the survival and the recovery plan. Invariably, some tough and hard decisions need to be made, including for example, opting for the unpopular decision of putting in place pay-cuts and other necessary cost-cutting measures.

The firm’s leadership must also demonstrate a good example of absorbing higher pay-cuts – if necessary – to assist the firm. The firm’s leadership must also show empathy to the general work force during these trying times. The workforce is simply not numbers; they are an integral part of the firm’s survival and prosperity plan.


3. Adoption of a long-term strategic plan

It is difficult to predict how long the COVID-19 pandemic will last. Many reports predict that it will continue until a vaccine is found which may be in the range of 6 months to18 months. Facing this uncertainty, a firm needs to have a long-term plan to ensure its survival.

Will it have enough cash-flow and trade receivables to survive the 18 months’ duration? Is the business of the firm shrinking? Is the firm winning new clients? Are the existing clients of the firm deserting it? How would the firm retain its clients in a COVID-19 environment? Does the firm have to do a lot more to earn similar amount of fees compared to the past? Should the firm reduce its fees to retain clients? In any crisis related environment, cash is king! It is critical that each law firm has plenty of cash reserves and cash equivalent to survive the crisis.


4. Strategic employee/staff engagement and communication

Lawyers and employees are important assets to law firms, as law firms are knowledge-based entities. A higher portion of law firms’ operational costs are represented by salaries. In any crisis, the management of the crisis is important, and communication is therefore essential. The firm’s leadership must communicate and engage strategically with the partner, lawyers and its employees, of the firm’s plan to manage and survive the crisis, especially the firm’s leadership must give sufficient assurance that they will do everything possible to preserve the firm and by extension jobs.

Failure to communicate will result in uncertainties and have the effect of unsettling the minds and souls of the partner, lawyers, and employees and thereby productivity will be affected.


5. Preserving operational capabilities of the firm

A firm must continue to have the ability to serve the clients’, no loss of capabilities shall be endured as a result of the COVID-19 crisis. Losing capabilities means losing the competitive edge to continue to serve the clients, who may opt for other competitors. Even if there are problems within the organization, a firm must be seen as attending to its clients’ needs in the normal way, if not even better or quicker. The firm may have to impress on every partner, lawyer and employee to work harder to serve their clients as other competitors may try to snatch the firm’s clients by underpricing their fees. In a nutshell, the operational capabilities of the firm must not be diminished and or be seen by the client as diminishing.


6. Sustainability

Sustainability must be one of the embedded principles of a law firm if it were to survive a crisis. Any action plan, any recruitment policy, any procurement policy, should consider the aspect of sustainability.

Investing in the future and exploring new frontiers will be the hallmarks of law firms which embrace sustainability. Sustainability, as a doctrine, involves equal job opportunities, progressive retention policies, continuous training and retooling of expertise, embracing and continuous investment in technology, exploratory of partnership and networking arrangements, amongst others. All taken into account will contribute towards competitiveness of the firm, and creating cutting-edge positioning for the firm.


7. Seizing the opportunity of upscaling

Most law firms will be overwhelmed by COVID-19, and would take the obvious path of downsizing and retrenching some of the lawyers and employees. A progressive law firm will see COVID-19 as an opportunity to build further capacity, create greater visibility, offer new range of services, market themselves more aggressively, and refuse to be overwhelmed by the pandemic. Instead, it adopts an opposite strategy of upscaling its operations.

When others downsize, it upsizes and tries to achieve bigger market share. For example, whilst the market may be quiet during the MCO, the law firms may be embarking on accelerated marketing efforts, including via internet and social media.


8. Enhancing the level of technological application

Prior to the MCO, physical meetings (including court hearings and trials) and physical delivery of documents are generally preferred in contrast to online video conferencing and delivery of documents via electronic transmission.

However, as a result of the MCO, organizations were forced to accept and embrace the new norm. Working, attending to meetings, client engagement by utilising video conference tools (such as Microsoft Teams and Zoom for meetings, presentations, negotiations and even court hearings) as well as delivery of documents, issuing of e-invoices, payment of salaries via e-banking, throughout the MCO, are some of the examples of maintaining productivity and efficiency via appropriate utilization of technology.

A strategic thinking law firm will continue to invest to upgrade and make its’ infrastructure more sophisticated this regard.


9. Flexible working arrangement

In light of the fear and anxiety created by COVID-19 among the work force that some employees may prefer to work from home. In this regard, a firm can consider having a

flexible working arrangement such as allowing its employees to work from home.

This should be complemented by having a proper work-from-home scheme to be applied for lawyers and employees, including having the technological infrastructure to remain as effective and productive, as if they are working from the office.


10. Cost control mechanism

This is an obvious step. Every law firm must realise that the firm is not operating in normal business environment – business is shrinking, clients are more demanding, competitors are discounting their pricing, revenues may be declining. It is against this backdrop that every law firm, even if it is seemingly faring well, must still do the obvious of embarking on cost-cutting measures.

Non-essential items, entertainment expenses, less essential training budgets must be cut, if not culled altogether. In essence, “excess fats” must be removed. Some law firms

embark on cost-cutting mechanism by reducing office space, given that some of the work force may be working from home.

Applying the above steps and measures, we believe, will be relevant to law firms for their survival, to remain competitive, and continue to prosper in the future, and not being affected and overwhelmed by the COVID-19 pandemic.

The process would invariably involve serious decision-making mechanism and implementation across the law firm organization will require an obvious engagement process with all the partners, lawyers and workforce of the law firm.


Written by:

Mohd Farizal Farhan Abd Ghafar & Syed Zomael Hussain (