With the global economy besieged by the COVID-19 pandemic, many businesses are trying to figure out how to operate amidst a global crisis that has produced a major market disruption. After taking time to slow down and assess the situation, businesses must start thoughtful planning on how to survive this unprecedented time. This planning may include right-sizing cost structures for an unknown time period and investment in activities that can keep the business going as much as possible during this interim period. If a business can successfully navigate these murky waters, it gives itself the best chance possible to re-build and successfully compete in the marketplace on the other side of this market disruption.
Legal Innovators, ourselves a startup in the legal industry, is confronting these same challenges. Collectively, we have seen several market disruptions in our careers and have gathered some insight on essential operations and management. We share these thoughts, as part of a broader market dialogue, so that they might help others manage their businesses in these challenging times.
Optimizing Financial Operations
Utilize Free Business Tools to Maintain Productivity: With many staff working remotely and without the ability to talk in person, there are an abundance of free tools businesses can use to allow their teams to stay in touch and keep working. Using communication tools like Skype and Slack, or collaborative programs like Google Docs, allows teams to collaborate when they are not in the same place and helps teams to communicate more effectively.
When using this software, however, it is important to keep in mind cybersecurity and confidentiality risks. For instance, Zoom has come under attack recently because of privacy and security flaws, which have allowed third parties to hack into meetings and take over users’ webcams and microphones.[1] To its credit, Zoom has acknowledged the issues and taken aggressive steps to address. We also give Zoom credit for the incredible support they have provided to the nonprofit and educational communities. Finally, when team members use any sort of conferencing software, they should remain vigilant in ensuring that their confidential conversations and communications cannot be overheard or seen by any member of their household that is also working remotely.
Explore Nonprofit Advisory Services and Apply for Federal Funds: The U.S. Small Business Association (SBA) and U.S. Chamber of Commerce offer free guidance specifically for businesses responding to COVID-19, as well as information on how to apply for small business loan. Under the CARES Act, the SBA is offering relief options specific to the coronavirus crisis, such as the Paycheck Protection Program and the Economic Injury Disaster Loan Emergency Advance, to qualifying small businesses. These tools comprise a way to help maintain essential services during this uncertain time. We are attempting to access the SBA funding, and applaud the SBA, the Treasury Department, and the President and Congress for working hard to provide this support for both Wall Street and Mainstreet.
Eliminate or Reduce Unneeded Expenses / Contractual Communications: Going through your business expense statements and eliminating or reducing expenses that the business might not need during this time is fundamental for survival. For instance, businesses can consider cancelling or reducing the volume of scheduled deliveries for offices where there are fewer people physically coming into the office to work. As with every cost-saving measure, this might involve making some difficult decisions on which costs to keep and which costs to cut. Having a rationale for these difficult choices can promote legitimacy, transparency, and employee buy-in.
Many vendors, including landlords, software providers and even those for whom you already have accounts payable balances have shown willingness to work out arrangements for extending the due dates on payments. We have been very transparent with our vendors, and where we have needed to, worked out payment terms satisfactory to both parties. Certainty is everything in what are very uncertain markets. Remember, your vendors have employees, loans, and obligations that they too must satisfy. Providing clarity on timing, to the extent possible, and working out solutions or arrangements that are win/win for both parties is the best way to secure the future of your business and to help drive the right “system level” results insofar as your clear communications let other parties better plan in their own businesses.
Navigating Contractual Obligations
Reach Out to Creditors to Reduce or Push Back Payments: As covered above, reaching out to suppliers, your landlord, and any creditors, such as banks, to negotiate a payment plan in light of your particular ability to meet regular deadlines can lighten the financial hardship your company may be facing. Being transparent and honest about your ability to meet payments and obligations under the circumstances helps to foster good will in negotiations and these relationships.
Keep Customers and Investors Updated on Your Actions: Many customers can empathize with companies currently facing a hardship if you communicate with them transparently. Taking time to call key business contacts to ask how they are doing and to describe the steps you are taking to respond and mitigate risk increases customer confidence and empathy. We have worked hard to ensure customer satisfaction. In a startup, building, and then protecting, your brand is the best investment of intellectual capital you can make. In a similar vein, keeping your investors/board informed on plans, finances and need for capital is a good way of ensuring loyalty and compliance with any documents governing their investments. Should you need assistance, open, thoughtful, and clear communication is your best way to enlist investor assistance. In mid-March, I put together a plan for Q2, for both our investors and Board of Advisors that reflected the difficult market realities at hand, proposed solutions, and was clear in our ask. Not only were they supportive, but many were very helpful in terms of strategic input. Make your board/advisors strategic allies. You likely have a very captive knowledge base with these groups, and their great deal of experience, that you may tap into. Make them your true partners and it will pay huge dividends, both during the crisis and in a steadier state.
The Role of Force Majeure: Depending on whether a contract has a force majeure clause, or whether one can be implied, your business may be able to excuse its performance under a contract due to inability to perform as a result of COVID-19. Parties may also be able to use common law defenses of impracticability, frustration of purpose, or prevention by government regulation as potential options to release their obligations. If you believe these doctrines may apply to your business, we recommend consulting with a lawyer about the particularities of your contract(s). Again, we believe the best way to achieve business purpose is to hold conversations with the other party and see if a win/win solution might be reached. If not, the legal process and any suits can be costly. In such instances, mediation may be a good way to proceed. Look for an upcoming Webinar on these topics jointly put on by Legal Innovators and certain of our partners.
Adapting Your Business Model
Shift Your Sales Strategy to Online: Businesses can try to avoid heavy losses by shifting their presence online to target current and prospective clients virtually. Engaging clients virtually through social media, email lists, and video tools to reach old clients and new leads can help to compensate for loss of in-person sales. Legal Innovators has adapted to reaching clients through its social media platforms, such as Twitter and LinkedIn, and increasing blog postings on its website about timely topics. Additionally, check in on your clients and prospects, not just to ask for business, but to see how they and their businesses are doing. Be flexible. See if you can offer a different duration, costs, or delivery model for your services. Solving problems in this environment is at a premium. We believe investing in this is the best way to ramp up when the market normalizes in a post COVID-19 environment.
Pivot Services to Meet Demand: As highlighted above, as the market reacts to COVID-19, clients’ demand for services is shifting. Being able to pivot the services your business offers to meet this changing demand can help the business to remain profitable. Reaching out to clients to check in and see how you can help them, even if not in the traditional way you have helped in the past, can give you an idea of how to continue to meet the needs of current clients and attract prospective clients. To meet these new demands and better serve their clients, business can consider retooling staff from reduced-demand areas and train them to perform higher-demand functions. An example at Legal Innovators, we will research or help a potential client think through legal issues or business development at no charge. If business does emerge, we believe we will be the natural home for that business.
Reevaluate and Prioritize Essential Operations: During this time, it is important to have a plan for continuing to meet key business functions if important staff members are unable to work or revenue decreases. Ways to do this include retooling staff to learn new positions so that several members know how to perform key functions; temporarily suspending unused or unneeded operations to focus on priority and high demand areas; and using alternative and cheaper suppliers.
Many firms are already taking actions to cut costs by looking to alternative and more affordable service providers that can provide fast flexible services and reduce the need to take on large long-term fixed costs. At Legal Innovators, as the name suggests, we try to be innovative and offer clients flexible and cost effective solutions. We have big firm trained junior lawyers ready to work on a moment’s notice, with flexible term lengths and pricing. If you can modify your business model similarly, or in the ways discussed above, such modifications may lead to some short term revenue for the business. You want to be careful not to sacrifice the long-term integrity for short-term gain, but if you can harmonize these two objectives, we believe that may be the framework for a winning, long-term strategy.
The spread of the coronavirus is still moving throughout the world, creating ripple effects on businesses and the economy that will impact everyone for an unknown period of time. Taking steps to adapt to this new world can help to mitigate severe financial hardship and position your businesses to best compete long term once this pandemic has subsided.
Legal Innovators’ founders, CEO, Bryan Parker and Chairman, Jon Greenblatt, are happy to serve as resources to help business owners navigate essential operations and legal issues. Bryan can be reached at [email protected] and Jon can be reached at [email protected]. We encourage you to reach out. We want to be a resource for the community during this time. If appropriate, as a secondary matter, we would be happy to discuss how our junior lawyers can be a part of a business solution for your law firm, enterprise, or small to medium size business.
[1] Danny Hakim and Natasha Singer, New York Attorney General Looks Into Zoom’s Privacy Practices, The New York Times, Mar. 30, 2020, https://www.nytimes.com/2020/03/30/technology/new-york-attorney-general-zoom-privacy.html
Authors:
Bryan Parker, CEO
