We urgently press all law firms to delay redundancies and implement alternative capacity management in these early days of crisis.
Law firms that move too early with insufficient data may not survive. Instead we urge law firms to implement wide-ranging and multilayered methods to deal with both excess and insufficient capacity, and to reserve redundancies as a tool of last resort. We believe law firms that move at the wrong time are at risk of future collapse.
We know that lawyers are problem solvers and are amazingly good at synthesising complex and voluminous information. We also believe that lawyers are capable of great ingenuity, which when combined with sustained and focussed effort and directed to the right problems, will allow the boldest firms to come out of this crisis stronger than they went into it.
But first we must take a hard look at what is going on in most firms right now.
Now is not the time to make decisions
All law firm leaders are in bunkers today calculating how many lawyers (and non-lawyers) they should make redundant. However just because Qantas had to lay off over half its workforce, it does not follow that every organisation should do the same.
Our plea to law firms is that they wait before taking action to terminate staff. Reducing workforce numbers now will likely have long term serious impacts on your business.
It is normal that law firms are struggling to separate the very real human emotions of fear and uncertainty from level-headed business choices. We also saw this during the GFC, and the actions by most firms in that time caused the final breach between employer law firm and employee lawyer. Never again will we see lifetime loyalty of lawyer to firm, or firms too proud to take lateral recruits who they had rejected as graduates.
However as almost all major law firms behaved equally as badly as each other (except for the two who had a voluntary redundancy scheme instead of forced redundancies), the relational damage has been shared between all the firms.
But this time, if some firms get it right, and we hope they do, they may successfully oust their long term competitors. Those firms who get it wrong may be left behind, permanently cast off the leader board or even onto the recycling pile.
What happens if you use the wrong data?
We aren’t mathematicians but our sources indicate that many law firms are looking at the wrong data.
These law firms are predicting that there will be a drop off in work equal to or greater than the drop in productivity of lawyers due to the virus.
We don’t think so.
We think there will not be enough lawyers to do the necessary work over the next 6-12 months.
We predict that the impact on the legal workforce will be so significant, in law firms as well as in-house and in government, that law firms may need every healthy worker to work whenever they are available, even if that means half days, after the kids are in bed, alternate days, or weekends.
Why?
Because 60-70% of the population is expected to be infected with the virus, with the first 20% of the population to be hit in the first wave, which starts now.
Of that 60-70% of the population, 80% will have symptoms like true influenza (not the kind that you call the flu when you really have a cold). Within that 80% of so-called ‘mild’ cases, a number of people will acquire pneumonia. They don’t require hospitalisation, but the categorisation of the effect of the illness as ‘mild’ is extremely misleading to the general population.
Most media reports are wrong
We know that current media reports are that as little as 20% and up to 60% of the population will be infected with the virus and that of those infected, 80% will have a ‘mild’ case. Firstly, these numbers are wrong. The real numbers are much worse.
We have gone back to the primary sources and have found that experts have been misquoted and medical information has been misunderstood. Yes, we will give you our sources to prove it.
What you need to know is this:
- Current expert consensus predicts a 60-70% infection rate of the Australian and worldwide population. Not 20-60%, but 60-70%.
- A mild case is more debilitating for the sufferer than influenza in 99% of cases. The category of ‘mild’ is a medical category and even includes people who get pneumonia but do not require hospitalisation. The illness is mild compared to death, but not as a matter of human experience.
- 80% of cases will be so-called mild cases.
- Only 1% of cases are asymptomatic cases (with the caveat that without widespread testing we don’t truly know this number yet).
What this means for your law firm is that if you are making decisions based on:
- A belief that anything less than 60% of your workforce will be infected;
- A belief that the 80% of your workforce who is infected with a ‘mild’ case will be able to continue working; or
- A belief that team members caring for family members with mild cases will be able to continue working;
…then your decisions will be fundamentally flawed and potentially fatal to your business.
60-70% of the workforce of your organisation, including 60-70% of your partners, will be seriously unwell in the coming weeks and months. At least 48% of that workforce (80% of 60%) will be very sick for around 2 weeks at a time in unpredictable waves (i.e. the so-called ‘mild’ infection).
12% of your people will be gravely and seriously ill and will be hospitalised for an unknown duration.
Far from being more insulated from this disease due to social and economic standing, law firm partners may well be at higher risk of contracting the disease, just as ministers, executives and movie stars seem at higher risk due to the importance of ‘face time’ with these people.
In addition to the impact of lawyers who are infected by this disease, law firms must also take into account the business impact of employees caring for family members who are seriously unwell. There will be no safety net of grandparents or other family members in this time of social isolation. Only parents will care for children and only spouses for each other.
For example it is fair to assume that in most cases, an employee will get a ‘mild’ infection and be unable to work for 2 weeks, and then that same employee will be required to care for other family members for any number of weeks while the virus goes through the person’s family. It’s not difficult to imagine a staff member being unable to work for 1, 2, 3 months or more, even without any cases of serious infection in that family.
However, some staff members, even if they have the ‘milder’ symptoms themselves or somehow don’t get sick at all, will have family members with grave symptoms requiring hospitalisation.
Some proportion of the workforce, maybe 0.6% or less or more, will pass away. Other members of your people will be bereaved.
We cannot underestimate the emotional as well as the physical toll of this disease. The level of emotional distress in our community will be something none of us have ever seen in our lifetimes. There is no stiff upper lip, even among tightly controlled professionals, in a world in which loved ones are not only gravely ill, but are unable to be visited, to be comforted, to be farewelled. Of course many will survive. But the emotional cost of the fear and the helplessness and the inability to even see the people we love as they are isolated in their homes or the hospital is untold. Parents face the prospect of terrified children alone in intensive care, surrounded by strangers in hazmat suits. Some children will have to be taken in by family members while parents are hospitalised. Grandparents will die without seeing their families again.
Now is not the time for grave meetings in remote rooms of the building, one by one handing letters of termination with tables of benefits to our people. Now is not the time for stern warnings about working from home and using the firm’s resources appropriately. Now is not the time to introduce an environment of mistrust.
This is an opportunity to provide solace, to tell our people that we will do our best for them as we know they have always done their best for us. Now is the time to tell them that they matter to us, and that we are going to do everything we can to keep the lights on, and find ways for all of us to keep working if we can, and that we are going to solve each new problem together.
If you are still unpersuaded, let us point out that these same statistics will apply to your reduced workforce. If you cut staff now by 10% or 20% or 50%, how can you possibly be sure you will have enough capacity as the virus passes through our community?
Here are some other matters you need to consider before you reduce your workforce.
Your client organisations will be expecting you to be able to help them
The same percentage factors that apply to law firms will apply to in-house counsel and client organisations.
Your clients are used to relying on you when they have capacity problems. You are their capacity management system. They will forgive you for capacity problems due to the crisis if they believe you have done your utmost to ensure you can support them. However if they believe you have acted in a way that is against their interests, (or if they believe you have treated your staff unfairly in a time when lawyers and Australians should be pulling together), you may irreparably damage your relationship with them.
Either way, they will have no choice but to take their work to another law firm if you are not able to help them when they need you.
Some small and medium sized firms will likely go under
Some small to medium sized boutiques, even small national firms, may not survive this crisis.
Many more law firms than those of us at the big end of town would expect, still operate as though it were 1990. Firms where no lawyers have laptops. Their entire system is server based, not cloud based. All files are paper and heavily reliant on administrative staff to type dictated letters and do physical filing.
Those firms cannot survive any kind of prolonged periods of lawyers being unable to attend the office, whether due to social distancing, isolation due to exposure, or illness, because they have zero capacity for the firm to operate remotely.
As a result, the clients they service will require alternate law firms and normally that would mean you, with your perfect technology and entirely remote workforce. However you will not be able to take on any new clients if you don’t have enough staff.
If your competitors get this right, you may lose more than your reputation
We are concerned for the reputation of law firms who are perceived to treat their staff callously and unreasonably in a time of crisis. This kind of brand damage can be carried by organisations for a very long time. Which law firm shredded documents for big tobacco? Which law firm advised the Australian Wheat Board in the Oil for Wheat scandal? Which law firm tore up its graduate agreements after the GFC, leaving top university students stranded? Most of us over 35 know the answers without having to look them up, and that is because these things severely tarnished those firms and continue to do so even 10 or 20 years later.
However reputational damage is the least of the dangers to a firm that implements redundancies now.
There are two kinds of law firms
Law firms have a choice to shed lawyers now so partners can sleep better at night, knowing they have reduced their exposure even before they fully understand what that exposure is.
Law firms also have a choice to explore all alternatives to widespread redundancies, and to dedicate themselves to finding ways to keep people employed and productive. To be true leaders in a way that few people have been called to be since World War II.
If our predictions as to market demand are proven correct, we believe the first kind of law firm may not survive this crisis.
The second kind of firm will have enough base staff for work that is required now, and they will be able to move quickly to meet new market demand, wherever it comes from. They will pick up clients from law firms who are ruined by a lack of technology, and they will pick up clients from law firms who failed to keep enough capacity to meet client needs. They will also adequately meet the needs of their existing clients.
The law firms that are loyal, nimble, creative, and open-minded, will be able to demonstrate that they can be trusted in a time of crisis, and that will draw more work to them as clients feel safer in their hands. They will be able to pick up many of the lawyers shed by the first kind of law firms and given the ongoing capacity constraints plus their brand damage, those first law firms will not be able to attract work. The second kind of firm will also likely be able to poach lateral staff from the first kind, as even lawyers not made redundant will hold a grudge for their fallen colleagues.
If, when the music stops playing, the second type of law firm has all the best lawyers, all the best clients, and an emotional connection to the market as a whole, it is difficult to see how the first kind of law firm will ever manage to rebuild.
Of course we might be wrong
— OUR PREDICTIONS MAY NOT BE RIGHT —
Our view may be proven by history to have been extremist. It may also be proven to have been moderate. However we will not be caught sleep walking through this crisis, accepting media reporting without question or application to the real world of business. As lawyers ourselves our role is to assess risk.
We believe on this occasion the risk of overreacting by rapidly making redundancies is more dangerous than the risk of waiting.
We also believe that law firms have many more options than many are currently considering.
There are radical measures open to firms but these are radical times.
What we think firms should do
The following is a list of actions taken by companies in the past when faced with an external threat of this kind, as well as some ideas of our own. We believe law firms who are facing under-utilisation during this crisis should open all of these options up to their lawyers, and permit any kind of combination. Each one of these actions should be taken first and fully, before a single redundancy is made. And while we are not experts on non-lawyer workforces, it seems reasonable to apply these principles to all staff.
Lawyers will be able to work out a way to manage their workload within the existing constraints of their personal life under Covid-19, with children, parents, partners and so on, and still meet the needs of the firm. Those who can afford to reduce their hours will have the ability to do so, while those who cannot afford to reduce them will not be forced to.
Many households will need to become ‘shift workers’, with one parent undertaking childcare and domestic duties while the other works from home, then swapping shifts so the other parent can carry out their paid work. This cannot happen if everyone tries to work normal business hours.
— VOLUNTARY HOURS REDUCTION —
Lawyers should be given a choice to reduce their current hours as elected by them. This could be:
- A reduction in days
- A reduction in overall hours spread across days of their choice (such as a 3 day week across 5 days)
- Including the weekend into the work week (a 4 day week that includes one day of the weekend)
— REDISTRIBUTION OF WORK HOURS —
With or without a reduction of overall hours, lawyers may:
- Work morning, day, or night shifts (e.g. 6am-2pm, 9am-5pm, 12pm-8pm etc)
- Alternate shifts (as above but alternate mornings with nights for instance)
- Include weekend hours in their work hours (say a 5 day week including 2 days of the weekend)
— ABSOLUTE FLEXIBILITY TO STRUCTURE LEAVE —
Lawyers may elect to take:
- A leave of absence
- Unpaid annual leave
- Annual leave paid at half pay or quarter pay (e.g. 8 weeks of annual leave paid at half pay)
- ‘Borrowed’ annual leave
Firms could include a right to recall staff from leave if needed.
It is also likely to become the market standard to pay staff 2 weeks of extra sick leave if they are infected with or caring for someone infected with the virus.
We also have some radical suggestions that may be worth exploring in the near future:
- Allow staff to ‘sell’ their time to other law firms and share the revenue with them
- Directly ‘share’ staff on the open market with other firms
- Second lawyers to other law firms
- Allow staff to nominate a lower rate of pay and billing relief but to be paid for extra hours worked i.e. a 50% load for a 50% salary, but hours above their target they will be paid for on an hourly rate. This ensures you don’t pay above 50% unless there is billable work to justify it.
- Use Australian qualified lawyers who are based overseas.
- Use outsourced freelance lawyers overflow work
- Use in-sourced contract lawyers to fill in for absent staff
It’s not as hard as it looks
Just because it hasn’t been done before doesn’t mean it can’t be done. Lawyers are some of the best problem solvers on the planet. Many other industries have operated most of the models we suggest above, and all we need to do is borrow from them. We are capable of designing and implementing a more complex mode of working and we may simply have no choice if we want to make it through this and come out the other end.
We will continue to write on this topic but please get in touch if you have any questions or aspects of this topic you’d like to hear more about.
— OUR FACT CHECKING —
Media statement: Widespread media sources report the DCMO has advised 20-60% of the population will be infected with Covid 19.
The Federal Deputy Chief Medical Officer, Dr Kelly, held a press conference on 16 March 2020.
The question he was asked was in relation to the next 6 weeks:
“What percentage of the population are you modelling could be infected in the next month and a half? Is it 20 per cent? That’s what New South Wales were talking about on Friday. Or I’ve heard doctors say 60 per cent. What’s your modelling saying?”
https://www.health.gov.au/news/deputy-chief-medical-officers-press-conference-about-covid-19-on-16-march
Dr Kelly responded, but made two separate references, one to a statement by German Chancellor Angela Merkel and another to a statement by Dr Kerry Chant, the NSW CMO:
“So, yes, I think Angela Merkel said 60 per cent of Germans the other night. My colleague Kerry Chant talked about 20 per cent. It’s something in that range. I’m not going to speculate on the actual numbers. But this is an infectious disease. The more we can do to separate people and to stop that infection spreading, the better.”
When Dr Kelly referred to Dr Kerry Chant as having “talked about 20 per cent” he was presumably answering the question that had been asked, which was about ‘the next month and a half’. His response was accurate, as Dr Chant told the NSW Budget Hearing on Thursday 12 March 2020 that NSW was anticipating “20% of the population in the first wave to be affected”.
https://www.parliament.nsw.gov.au/lcdocs/transcripts/2328/Transcript%20-%2012%20March%202020%20-%20UNCORRECTED%20-%20PC%202%20-%20Health%20and%20Medical%20Research%20-%20Further%20hearings.pdf
Dr Chant was referring only to the first series of infections in the community, and was not speculating as to the total infection rate likely beyond the first wave.
However Dr Kelly significantly confused reporters by his reference to the statement made by Chancellor Merkel. Chancellor Merkel was talking about total infection rates as a whole. Dr Kelly also only mentioned the lower number of her estimated range. As our German is not good enough to translate the original transcript, we rely on the New York Times report as a likely correct translation of her press conference of 11 March 2020 where she was quoted as saying:
“When the virus is out there, and the population has no immunity and no vaccination or therapy exists, then a high percentage – experts say 60 to 70% of the population – will be infected, so long as this remains the case.”
Two-Thirds of Germans May Get Coronavirus, Merkel Says
While some media outlets accurately reported the 20% infection rate as relating to the first wave of infection, widespread media reports have been of an infection rate of between 20 and 60%.
Naturally we all like to hope for the best case and that our efforts to socially distance will be effective. However there is no credible evidence that we have found that any expert has predicted a total infection rate of only 20%. This number is false and relates only to the ‘first wave’.
Media Statement: 80% of cases are mild cases of Covid-19
There is a technical truth to the statement that 80% of cases are mild, when viewed as a medical diagnostician. The cases are medically mild – they do not require long term hospitalisation or medical treatment. However from the perspective of the sufferer or the employer, the impacts are worse than the flu (and we mean influenza, not a cold).
The WHO undertook a joint mission with China and released its report on 24 February 2020. In this report WHO concludes that 80% of the infected have a ‘mild to moderate’ disease ‘which includes pneumonia and non-pneumonia’.
The list of symptoms are as follows:
“As of 20 February 2020 and based on 55 924 laboratory confirmed cases, typical signs and symptoms include: fever (87.9%), dry cough (67.7%), fatigue (38.1%), sputum production (33.4%), shortness of breath (18.6%), sore throat (13.9%), headache (13.6%), myalgia or arthralgia (14.8%), chills (11.4%), nausea or vomiting (5.0%), nasal congestion (4.8%), diarrhea (3.7%), and hemoptysis (0.9%), and conjunctival congestion (0.8%)” (page 12).
“Most people infected with COVID-19 virus have mild disease and recover. Approximately 80% of laboratory confirmed patients have had mild to moderate disease, which includes non-pneumonia and pneumonia cases, 13.8% have severe disease (dyspnea, respiratory frequency ≥30/minute, blood oxygen saturation ≤93%, PaO2/FiO2 ratio <300, and/or lung infiltrates >50% of the lung field within 24-48 hours) and 6.1% are critical (respiratory failure, septic shock, and/or multiple organ dysfunction/failure).
“Asymptomatic infection has been reported, but the majority of the relatively rare cases who are asymptomatic on the date of identification/report went on to develop disease. The proportion of truly asymptomatic infections is unclear but appears to be relatively rare and does not appear to be a major driver of transmission.” (page 12)
https://www.who.int/docs/default-source/coronaviruse/who-china-joint-mission-on-covid-19-final-report.pdf
In other words, someone with even a mild form of this disease will be very unwell, and not able to work.
