12 May 2020

Key takeaways

  • Although it seems that the legal sector has not been as severely impacted by COVID-19 as some other sectors of the economy, law firms still face unique challenges – from changing demand to increased financial risk
  • Consider the importance of maintaining cash flow, as the continuing fallout from the crisis rolls out across the economy
  • By acting now, you may be better positioned to ensure that your practice remains resilient and ready to adapt to an unpredictable environment.

The challenge ahead for legal practices

While some law firms may not have been as impacted as some other sectors such as hospitality or travel, the COVID-19 situation poses some far-reaching challenges for lawyers.

As the government’s containment policies continue to be rolled out, many firms may experience significant shifts in demand. While some practice areas that are more vulnerable to these impacts (such as property) may suffer declining demand, the government, insurance and employment practice groups appear to be less affected. Depending on firm size and client base, there may also be a rise in distressed clients and debtors.

Meanwhile, many firms are also adjusting to new operational rhythms and the technological challenges of working remotely; some for the first time. This may lead to people management, leadership, and cultural issues that may need to be navigated carefully.

In this guide, we’ve listed some suggestions for your consideration, that may assist your practice in adapting to an unpredictable environment.

Financial considerations

You may consider:

  • Reviewing financial forecasts and revenue-sensitive scenarios, and planning your response to situations you consider to be ‘high risk’. Also leveraging your accounting and banking partner for support through this process
  • Reviewing working capital requirements, and thinking about steps to boost cash reserves and liquidity
  • Critically assessing debtors, allocating time and resources to collecting funds and/or revising payment structures or amounts
  • Identifying key payables, ensuring that you have sufficient working capital and reserves to meet financial obligations

Operations

You may consider:

  • Carefully monitoring the impact of COVID-19 on different practice areas, and thinking about whether there is an opportunity to pivot towards sectors that have remained buoyant
  • Reviewing processes and looking for cost-effective ways to digitise, automate or outsource manual activities
  • Reviewing your business continuity plan, and thinking about high risk contingencies – for example, a staff member becoming infected with COVID-19.

People

You may consider:

  • Ensuring that staff are well supported and engaged, and putting into place measures to maintain a strong culture while adapting to new ways of working
  • Opening the channels of communication with your people, explaining key business decisions including the rationale behind them, and your vision for the future of the firm. Your team may appreciate being involved in these discussions.

Technology

You may consider:

  • Reviewing your technology suite and ensuring that it supports efficient and secure remote working, including:
    • Secure communication and collaboration tools for both staff and clients – for example, Legaler, Skype or WebEx
    • Cloud data storage tools – for example, Dropbox, Microsoft OneDrive or Google Drive
    • Practice management software – for example, LEAP Lexis Nexis or FilePro

Clients

You may consider:

  • Checking in with clients to discuss their situation
  • Assessing clients’ capacity to make payments, and considering ways to work with them.

Industry bodies and partners

You may consider:

How Macquarie can help

The Macquarie Legal team is here to help you with personalised support, delivered by industry specialists.

To find out more, contact your Macquarie Relationship Manager, call 1800 442 370, or visit macquarie.com.au/business-banking/legal-industry

Additional information

The information on this page has been prepared by Macquarie Business Banking, a division of Macquarie Bank Limited AFSL & Australian Credit Licence 237502 ("Macquarie") for general information purposes only, without taking into account your personal objectives, financial situation or needs. Before acting on this general information, you must consider its appropriateness having regard to your own objectives, financial situation and needs. The information provided is not intended to replace or serve as a substitute for any accounting, tax or other professional advice, consultation or service.