Bar News - July 6, 2007
Law Practice Management: DISASTER! Best Practices in Planning for the Worst
By: Anita S. Becker
The April 21, 2007 blaze in downtown Berlin completely destroyed the law office of attorney James Michalik, who was forced to set up his law office in a nearby hotel until he found new quarters and reconstructed his records and files. Photo courtesy of the Berlin Daily Sun.
While it is nearly impossible to predict whether or not a disaster will ever strike your law firm, having a current disaster-and-recovery plan is just smart business. Such a plan could save your practice—and possibly even your life.
Disasters that can disable your practice can result from fires, floods, hacker intrusions or plain old computer crashes, or even the untimely death of a key individual in your firm. It isn’t possible to plan for every contingency, but you should be aware of basic preventive measures everyone should take, and know where to turn for help.
NHBA Can Help
The NH Bar Association’s Member Services department is enhancing the resources it offers members in the area of disaster planning and recovery. For example, on our Web site, you will find updated materials and disaster planning and recovery tips and checklists. (See resources sidebar.)
The Bar’s update of its resources was nudged forward this spring, in part, by the plight of Hon. James E. Michalik, a sole practitioner and special justice of the Berlin Family Court, who contacted the Bar to find resources and contacts to help him reconstruct his practice following an April 21, 2007, fire which damaged or destroyed many of the law firm’s files and records.
Michalik’s Berlin law office was destroyed in a blaze that also damaged several other downtown buildings. Afterward, the practice operated out of a Gorham hotel for several months until its recent move to a new office. Fortunately, Michalik had computer equipment at his home that contained recently updated client data.
NHBA Member Services also was able to provide him with checklists and materials from both the NHBA Web site and from the ABA on disaster-recovery subjects, and he was put in contact with two attorneys—panelists at a NHBA CLE program on disaster recovery—who had experienced similar fire damage at their firms. Michalik also received tips on records reconstruction and contacts to obtain disaster relief loans.
Member Services Coordinator Rose Anocibar said Michalik’s call was a spur to update the Bar’s resources in this area. “What we had was a lot of information on planning for disaster, but not a lot on what to do after disaster strikes,” she explained. “We want to develop a program that will assist attorneys during the recovery process, especially if they’ve lost everything.”
“We want to make sure that our members have access to the latest information.” Anocibar said. She added that, for the convenience of members, more resource material will be added to the NHBA Web site for self-help. Member Services will also give assistance to members over the phone.
“If members cannot find what they need on their own, we are here to help,” explained Anocibar. She said that Member Services can research and pull together relevant contacts and information from various sources, including the American Bar Association (ABA) and other state bars.
When a Partner Dies
Acts of nature and burning buildings are not the only things to plan for in a disaster plan; the loss of a key person can also have a devastating effect on a firm, both emotionally and in a business sense.
“You can’t really plan for the unexpected death of a partner, but there are things you can plan for,” said Patrick T. Hayes, managing partner of Baker & Hayes in Lebanon.
Hayes was NHBA president when his law partner William A. Baker died on Dec. 27, 1997. At the time, the firm had five attorneys—including Baker. When confronted with the news of his colleague’s death, Hayes’ first priority was to make sure that Baker’s widow and children were comforted and taken care of financially. Then he and the other attorneys set to work reorganizing the firm’s workload so that clients’ needs would be met. “Because we are a small firm, going from five attorneys to four made things difficult. Bill didn’t specialize, but he had certain strengths in the way he handled things.”
Fortunately, the small firm’s team approach helped everyone in the firm come together to shoulder the load of the departed partner. Baker says the firm holds regular meetings twice each week to ensure that all of the attorneys have a working knowledge of each other’s cases and know what is going on within the firm. On Mondays the attorneys discuss new clients and pending cases, and on Thursdays they have a litigation meeting where they discuss status of court cases and court scheduling. “We still take a team approach,” said Hayes. “Our clients know that the firm—and not just one particular attorney—represents them.”
Soon after Baker died, his clients were contacted and told of his passing; they were reassured that the firm would continue to handle their cases unless they chose not to stay. Hayes said that he does not recall that any of Baker’s clients left the firm.
“We all turned it up a notch and worked harder to get things done, while at the same time dealing with our own personal grief,” said Hayes. “You almost have to postpone your grief in order to regroup and do what needs to be done, which is the hard work of taking care of your clients.”
There were a number of things the firm had to do for the transition—all of them un-billable but critical. Tasks included:
- Reorganizing the work load;
- Contacting clients and reassigning cases;
- Contacting courts and reworking court schedules;
- Establishing client relationships with their new attorneys.
“It took us a good six months to get back to where we thought we were operating normally again,” added Hayes.
Hayes was impressed with how his fellow Bar members, clients, and court officials were accommodating and helped the firm in the aftermath of Baker’s death. “I think this is because the Bar is of such high quality. When Bill died, so many people called to see if they could help out in any way,” said Hayes.
The name Baker is still on the firm’s sign. Hayes joined Baker’s solo firm in 1979 and became a partner in 1981: the firm became Baker & Hayes. “As long as I’m here it will be Baker & Hayes,” says Hayes. “I keep the firm name the same for Bill’s family and his memory and for continuity.”
Other Things to Think About
Natural and man-made disasters such as floods, fires, and the death of key people are not the only kinds of catastrophes law firms need to be concerned with; there are also technological emergencies such as computer hackers or server meltdowns, violent crime and theft, among other perils.
Edward Poll, a law practice management expert and columnist for the Lawbiz.com Web site, once wrote on the subject of disaster planning and warned that: “disgruntled employees, unhappy clients and deranged strangers have wreaked havoc on law firms.” He advised managers to be sure that all office and equipment keys are returned when employees leave the firm, along with computer disks and other proprietary or confidential documents. Poll added that employee agreements should state what specific information is confidential and the property of the firm. No matter what their size, all law firms need security plans and controlled access to their offices.
Attorney Kenneth C. Bartholomew, partner at Rath, Young & Pignatelli in Concord, said during a 2003 NHBA CLE presentation, “Don’t Be the Weakest Link,” that it is critical to have measures in place, such as up-to-date security software; password protection on all computers; and strictly controlled access to the firm’s network.
“Hackers can cause disastrous and expensive harm to your firm through theft of client data; identity theft; public disclosure of client data; partial or complete destruction of client data; destruction of the computer network; and undetected, damaging changes to existing documents,” he explained.
“The most important thing a lawyer can do is take reasonable measures to protect clients’ documents and property,” said Attorney John Kissinger, partner of Nelson Kinder Mosseau and Saturley; his area of practice is professional liability defense.
Kissinger stressed the need for redundancy in systems and suggested that electronic technology be used as much as possible to reduce the number of irreplaceable hard copy documents at a firm. He said that “client documents of independent legal significance,” such as wills, powers of attorney, settlement agreements and trusts, should be scanned for the firm’s use and the originals given to clients to store in a safe place.
Law practice management expert Poll recommended backing up, and storing at an off-site location, paper records such as: master files, billing records, court schedules, and corporate records. “The frequency of computer back-ups depends on how much work you produce between back-ups and how much you can afford to lose,” he noted.
Kissinger also advised that the firm, and its attorneys, have insurance that covers the potential destruction of client property.
Insurance should also include adequate professional liability, property and casualty coverage. Poll said an “insurance policy should be tailored to your specific practice. It should cover damage to or loss of real and personal property, loss of revenue, general liability, reconstruction of destroyed documents, reconstruction or lease of new office space, and extra expenses related to a disaster or catastrophe.”
Kissinger said using sound risk-management principles can help a firm create a plan that addresses some of the problems that might occur, but it is impossible to plan for every kind of possible disaster. “It is important to view these things in terms of reasonableness,” said Kissinger. “No one can expect the exact nature of catastrophic events; and multiple redundancies might prove to be unfeasible or cumbersome, especially for small or solo firms.”
Likewise, following basic rules of ethics, such as diligence; client communication; safekeeping of property; and confidentiality of information—before and after a disaster—should protect lawyers from potential malpractice claims, explained Attorney Charles L. Greenhalgh. Greenhalgh, a member of Cooper, Deans & Cargill in North Conway, presented at the 2003 NHBA CLE, “Ethical Provisions Related to Disaster Prevention.” Relevant provisions can be found in the ABA’s Model Rules of Professional Conduct, especially Rules 1.3, 1.4, 1.6, and 1.15 (http://www.abanet.org/cpr/mrpc/mrpc_toc.html), and in the corresponding New Hampshire Rules of Professional Conduct (http://www.courts.stte.nh.us/rules/pcon/pcon-1_3.htm).
Kissinger noted that in the more than two decades that he has been giving risk management advice to client law firms, none have had a professional liability claim filed against them related to their actions in an emergency.
More Disaster Prevention & Recovery Resources
Helpful information on the NHBA Web site can be found by clicking For Members and then Member Services. Also under For Members, you can find the NHBA Insurance Agency. To contact Member Services Coordinator, Rose Anocibar, e-mail her at email@example.com or call 603/715-EASY (3279), extension 3214.
For advice on anything regarding insurance, contact Suzanne Morand, NHBA Insurance Agency at firstname.lastname@example.org or call toll-free, 866/642-2292.
Currently, the Bar Web site, www.nhbar.org, offers a link to a free, non-credit NHBA CLE on “Disaster Prevention and Relief for Law Firms.”
Further help can be found on the ABA Web site: http://www.abanet.org/barserv/disaster/disasterbiblio.html provides disaster preparedness advice. http://www.abanet.org/legalservices/lpl/purchasersmaterials.html provides information on selecting professional liability coverage;
Also, the Lawyers’ Professional Indemnity Company, www.practicepro.ca, offers a helpful guide, “Managing Practice Interruptions,” at http://www.practicepro.ca/practice/Practice_Interruptions_booklet.pdf.
Disaster Recovery Online CLE July 11
A special live Webinar on disaster recovery for law firms will be broadcast on Wednesday, July 11 at 2 p.m. that will be eligible for NHMCLE credit. See NHBA CLE ad on page 14 for details.
Anita S. Becker, former Bar News managing editor and a U.S. Army Reserve officer, recently resigned from the NHBA staff. She began her second tour of active duty, serving as the deputy commander of the 174th Infantry Brigade, primarily based at Fort Dix, NJ, which oversees the training and evaluation of Army National Guard and Reserve soldiers.