The economic impact of COVID-19 has hit nearly every industry imaginable, including law firms. In fact, one of our very first Law Firm Leadership Collaboration Circles back in early April discussed managing law firm finances during the COVID-19 crisis.
At that time, there were definitely far more questions than answers: Will business grind to a halt? What is happening with PPP and disaster loans? Will we get to keep our whole team? How will the transition from working at the office to working at home go?
And while there are still plenty of uncertainties out there now, we thought it would be beneficial to revisit law firm financial management as states gradually ease coronavirus restrictions and communities attempt to return to a semblance of normalcy.
Law Firm Financial Management & Relief Options
While we may not know the full financial impact of COVID-19 for a while, it’s heartening to hear that many firms have not noticed a steep drop in revenue.
Additionally, government-issued relief options like the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) have offered a cushion against current and future losses, as well as financial peace of mind.
These programs provide a nice safety net; however, there is still some confusion over repayment options and whether they can be forgiven, so hopefully we will see more clarity soon.
It’s important to continue asking your bank and financial experts any questions you have and to be vigilant about tracking where every dollar is spent from your loans.
At some point, you will likely be audited and have to prove where that money was spent, so be sure to document, document, document.
Uncertainty Surrounding Law Firm Operations
One of the biggest unknowns back in April was how the pandemic would affect law firms’ ability to retain new clients.
No one had any idea how the social distancing and stay-at-home orders would impact the legal industry. Court closures and a worry that people would put services offered by attorneys on a lower priority were a big concern at the beginning of the COVID-19 outbreak.
Something that is critical to ensuring your business can continue operating is understanding your own internal goals and KPIs.
You need to know how many clients, how many billable hours, what types of cases bring in what amount of revenue, etc., to gauge how well you are weathering the storm and whether you need to make any changes.
Tracking performance metrics is critical to staying on top of your law firm’s financial well-being in a time of such uncertainty.
Be sure to join us for our next Law Firm Leadership Collaboration Circle as we discuss law firm culture and client-centered service during COVID-19.