The COVID-19 pandemic has had a significant impact on the legal industry. The resulting closures and delays will likely create longer-term issues for law firm operations than originally expected when the severity of the health crisis was still unknown. In addition, the rapid transition to virtual proceedings and managing a remote workforce has probably sparked changes in how your law firm is run.
Some of the biggest, and most important aspects of how your firm has been impacted may be in case intake and revenues. An independent survey was conducted among plaintiffs’ attorneys and approximately 99% of respondents reported some level of impact to their firm because of the coronavirus outbreak.
- Case Intake
56% of survey respondents reported a decline in case intake as the country began, and continued, to feel the effects of the pandemic and subsequent shutdowns. Among the hardest hit were those attorneys who primarily litigate motor vehicle and personal injury cases. With many states under stay-at-home orders and individuals turning to online shopping and delivery services, the number of individuals on the roads and frequenting public places became minimal. As that trend progressed, fewer and fewer cases were retained.
Due to a reduction in cases retained, you may turn to increasing your advertising efforts. This makes good sense in more than one way: a) to make up for the lack of cases being brought into your firm and b) to respond accordingly to the influx of people who are spending most of their time at home, perhaps spending a greater amount of time in front of the television or computer, where your advertising can be seen. This however requires an investment, which must be balanced with the potential slowdown your firm may be facing.
On top of the immediately evident obstacles, there’s also another factor to consider. When seeking out new cases, you’re in competition with all the other firms facing the same problems because of the shutdowns. And, with potentially less people venturing out and normal routines becoming severely limited, there’s then a smaller pool of individuals seeking your firm’s services. As such, the effort to bring in new clients becomes an even greater challenge.
- Case resolution
Similarly, 50% of those who completed the survey stated they experienced some level of decline in case resolution. As a plaintiff’s attorney, you may be one of the many that has seen delays in discovery, setting trial dates, hearings and motions that have been pushed back—all of which ultimately affect your firm’s workflow, case resolutions and revenues.
In addition, many lawyers are feeling the effects of the pandemic becoming a “crutch” to lean on—65% of attorneys who took the survey report experiencing insurance carriers and/or defendants using the pandemic as an excuse to delay resolution of their cases. Of those who are able to actively participate in settlement negotiations, 53% say they’ve seen a lack of offers or lower offers from defendants.
Resulting from the combination of all of the above complications associated with the pandemic are significant revenue issues for many firms. Court closures have caused cases to be placed on hold. Now, as courts begin to cautiously reopen, many are dealing solely with criminal matters, leaving you, as a plaintiffs’ attorney with anxious clients, on the backburner. Your cases that were set to move forward back in March of 2020 may not be heard until well into 2021.
45% of survey respondents expect to have to seek out additional financing for their firm should a second wave of shutdowns occur. As such, it is imperative that you maintain firm stability and start planning—if you haven’t already—for the long-term impacts of this crisis. Although peaks and valleys in cash flow are inherent to a contingent-fee practice, there are resources available to you as a plaintiff’s attorney specifically tailored to address those unique situations.
Law firm funding options have expanded immensely in recent years. There are financing solutions that can be customized to directly meet the obstacles your firm is facing. Bridging the gaps in revenues, especially given the current legal and economic environment, is imperative to maintain operations and continue to advocate for your clients effectively. You need to be able to push forward with case workup and also keep your firm running normally with the staff in place to do so.
Working with a lender who understands the nuances of a contingent-fee practice is essential. Researching all the options available to you, from working with your local bank, to exploring financing with a specialty or commercial lender who deals exclusively with a firm like yours is a good place to start. Being prepared and having access to stable financing will allow your firm to weather this difficult time and be positioned to ramp up immediately when the time allows.
The survey referenced herein was conducted by Counsel Financial for informational purposes only on 5/5/20 using SurveyMonkey.