March 26, 2020, 12:38 p.m. CDT
When it comes to figuring out what to do with your law firm amid the COVID 19 pandemic, lawyers should think about two things: Who has legal needs and solvency?
“The first thing you need to do is find out if your company is currently a viable model. Marketing things that people don't need or can't afford is very problematic because you'll be spinning your wheels, ”said Lawrence Kohn, a Los Angeles-based business development coach who works with lawyers.
If you are a lawyer whose law firm is frozen in the face of protection laws across the country, or if you are at work but your clients are no longer able to pay you, now is the time to brainstorm with a focus on how you can keep your business alive.
According to Jialan Wang, a finance professor at the University of Illinois at Urbana-Champaign's Gies College of Business, you may stay in business, conduct creditor negotiations on your own behalf, and track new corporate grants and loans.
“This is really an unprecedented crisis. Keep as much money as possible, but if you need a loan, get a loan and take care of everything else later. The no. A priority for a small business is to stay alive, ”said Wang.
She also advises asking landlords and creditors to negotiate payments and allowing a certain amount of time each day to follow up with intelligence agencies to see what COVID-19 small business grants may be available from local, state, and local government are federal agencies.
"Perhaps small law firms can band together and have a Google document or email list to keep up to date with the introduction of really important guidelines," Wang suggests.
With regard to business loans, creditors generally want to see the creditworthiness of applicants and the amount of money brought in by their companies. Since law firms generally have little collateral, lenders could consider the partners' personal assets.
In addition, community banks and credit unions could offer the best business credit options, and lawyers could also consider non-traditional lenders.
"Think creatively. Amazon and PayPal have become huge merchant lenders on their website. They could be a lot faster than banks," says Wang.
According to Lucian Pera, whether a non-traditional loan violates a lawyer's regulations depends on the conditions. As a partner in Memphis, Tennessee, partner at Adams and Reese, he frequently advises lawyers on rules of professional responsibility and was previously Chairman of the Board of Directors of the ABA Center for Professional Responsibility.
"Assuming that these are pure vanilla loans with normal trading conditions, I don't see any problems that would be different from a traditional lender's loan, but I would see the opportunity for lenders to process client payments to lawyers, creative terms or tools develop that may violate some ethical rules, ”he wrote in an email to the ABA Journal.
If you already have a cash flow problem, sometimes taking on more debt is a bad idea, depending on credit terms and cash expectations, says Robert Markoff, a Chicago lawyer who represents the creditors.
"When you're in a hole, stop digging," he advises. It is better to negotiate forbearance with creditors. In addition, many creditors have stopped working with outbound collections this week, and lawyers may want to consider the same approach, says Markoff.
“We have to understand that consumers are primarily concerned with the safety of themselves and their families. We talk about food and accommodation, ”says Markoff. "Don't just think about today, but tomorrow. What gives you a better relationship with your customer? Give them some air to breathe when they have problems."
Regarding lawyer downtime – since most courts are closed and no business is ongoing – Markoff recommends contacting former clients to see how they are doing and to find out if they have legal needs. Kohn also suggests this, but advises you to be careful.
"It's a balance between compassion and helping people, but not being attracted to people you can't pay for," says Kohn, whose website includes an app that helps people with things like analyzing innovation skills.
"We teach people to document every possible idea you can think of and not" I'll think about it later. "They won't do it. Our thoughts are racing now," says Kohn, adding that his app asks fundamental questions about the ideas, eg "Why do you think it's a good idea?" And "Is it one good idea for now or maybe later? ”
The good ideas could also get better if they are discussed with others.
“You need systems to stay involved in the brainstorming process. The most important thing is to talk to people you trust. That means you can call anyone you can, which means that you can submit the time that might be available, ”says Kohn, adding that brainstorming could be combined with networking.
"Create brainstorming video conferences, put five or six people together, and make an appointment to share ideas," he says.