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COVID-19 has posed a once in a generation challenge for many law firms. Our Bellwether survey found that 57% of firms have responded by furloughing staff to control costs. But is this counter-productive? Should you be reallocating your furloughed staff for better means – and in ways that could benefit both your clients and incoming revenue?

Brian Evans, Managing Partner of Lanyon Bowdler Solicitors spoke to Christopher O’Connor to share how his firm has won new clients through a different approach to customer service and staff levels during the lockdown period.

UU����ֱ�� recently hosted serval Managing Partner forums to review findings from our recently released Gross Legal Product (GLP) Report. A version of Gross Domestic Product (GDP) for the legal market, UU����ֱ��’ GLP report aggregates and leverages over 100 publicly available datasets to determine, predict and quantify growth or decline in demand for legal services across 13 practice areas. Download the report here.

When lockdown was announced, how did you approach the furlough question?

As a firm, we were concerned that if we moved to a skeleton staff it could damage our core message that we are an accessible, expert local service. We needed to be effective in our approach to furlough, and we did need to furlough staff in the areas where demand severely dropped. However, we wanted to make sure we retained enough fee earning and support staff so that we didn’t cut down on our ability to provide the excellent service we sell ourselves on. We chose not to furlough as many staff as we could have because it was important that clients knew we were there for them during this time.

How did you reach this decision?

We kept an eye on what local firms were doing and I was involved in Managing Partner conferences during lockdown which gave a feel for the approach others were taking. We did not speak to clients, as prior to lockdown we ran a client listening project through an outside consultant to learn what was valued most about the firm; we found clients liked our service and feeling part of the team. I spoke with the Department Heads to review the amount of work coming in and made pragmatic decisions. Also, in a few cases, staff have asked to be furloughed due to childcare commitments.  

Did you have any doubts?

Absolutely. I was really concerned to start with. I had heard of other firms who had furloughed all of their support staff, and it did make me question if we had made the right decision. I have kept an eye on the amount of work and new matters coming in, as well as getting feedback from staff and their clients. We have attracted new work because we remained open; I read every client feedback questionnaire at the end of each matter, and we have received a lot of good feedback across departments. The original intention of our approach was as a retention initiative and to keep our existing clients happy, but a positive benefit has been new business acquisition.

Survey responses to “What most impressed you about Lanyon Bowdler?” include:

“As always, your staff handled things brilliantly despite lockdown meaning working from home; they were catching up with emails on a Sunday and there was total dedication to providing a great service”. One fee-earner was praised as “efficient, communicative and proactive, just excellent” in the face of COVID-19.

How have you judged staffing levels as the crisis has progressed?

We review furlough regularly. I was conscious of difficult circumstances that can come from working at home and we didn't want those staff that weren't furloughed to have too heavy a workload, and to add to their stress by overburdening them, even if it was cheaper for us. By and large, most people are back as work has picked up, but there are still a few on furlough, including some of our Front of House and Reception staff, who would ordinarily welcome clients to the office, as we are still carrying out most client meetings remotely.

How have you managed costs?

We have worried about costs and have looked at things very carefully. Initially, we had a hiring freeze, which was driven by both cost and the difficulties in onboarding new staff without an office and the usual training available. This freeze has been lifted in some areas and we are recruiting again, but we have put some recruitment plans for non-fee earning staff on hold. We have significantly cut down on our marketing budget for events but spending on social media marketing has been maintained. We are conscious that we needed to keep our name out there; we wanted people to know that we are still operating.

What has been the financial impact of your approach?

I expect a dip in profitability. Partners’ profits will be lower at the end of the year. However, revenues have, so far, held up better than predicted, and we do need to take the long-term view. We decided early on to not reduce salaries; our staff work incredibly hard and we wanted to maintain their incomes where possible. As a broad practice, we need to keep the firm in balance; over the years expansion in one practice area has been balanced by merging with firms which are strong in other areas in order to maintain that balance. It is in times like these when that balance really works, as when residential conveyancing revenue dipped significantly initially, other areas continued to bring in fees or saw an increase in fees.

Lanyon Bowdler’s new clients include:

·&�Բ�����;&�Բ�����;&�Բ�����;&�Բ�����;&�Բ�����;&�Բ�����; A local company which diversified to get into the production of PPE. Their usual firm had no-one available to urgently review contracts, so Lanyon Bowdler took this on, and it has led to repeat business since.

·&�Բ�����;&�Բ�����;&�Բ�����;&�Բ�����;&�Բ�����;&�Բ�����; A local estate agent has become a source of referrals as their usual firm furloughed a significant number of staff, resulting in delays and matters not progressing.

Has your decision to maintain staffing levels paid off?

In the short-term, it is likely to be net-negative on a financial basis; we could have had less expenditure in the early months if we saved more in terms of cost or furloughed more staff. In the long-term, it will be net-positive because we have maintained those service levels. An unexpected benefit has been the positive effect on recruitment. We have been approached in areas we have previously found it difficult to recruit into, by individuals looking to move firm due to unhappiness over how furlough was handled in their own firm.

What advice do you have for other firms?

I think what is important is that you are true to your vision of what the firm is through this crisis. You do have to look at costs and revenue to make sure you balance the two, but whatever decision you make should be based on the kind of firm you present yourself as to the market. You need to ensure that your decision-making through this is consistent with that.

What do you think will happen next for the legal market?

It’s anyone’s guess! We are now officially in a recession and I think times are still potentially going to be tough. I can’t see a return to the office for some time and ultimately people will want more flexibility to work from home in the future. If our customer confidence remains as buoyant as it is currently, we will ride it out OK. If we do see mass redundancies across the economy as a whole, combined with a second wave, resulting in a dent in consumer confidence, that’s a harder situation to manage, but we’ll continue to base our decision making on what best enables us to respond to the needs of our clients.

Further reading:

Bellwether Insights 2020: Has the crisis created permanent change to legal business operations?

Bellwether Insights 2020: Could small firms be weathering the crisis?

How to manage legal compliance and risk management remotely

How to effectively manage remote teams with technology

6 creative fee arrangements to solve law firm fee pressure

5 key risk management priorities during the pandemic – Emma Dickin, UU����ֱ��' In-house, Risk & Compliance Specialist