Law360 (June 26, 2020, 8:23 PM EDT) -- Sitting in Clark Hill PLC's Detroit office two days after opening back up with a quarter of the firm's staff allowed on site, CEO John Hern was busy doing what he has been doing since the beginning of the pandemic: assessing, reassessing and recalibrating the firm's response to the situation.
"The actions that we take will define us," Hern said.
He knows this from experience. This is the second time Hern has been tasked with managing the firm through a major financial crisis, having been at the helm during the 2008-09 recession. The coronavirus pandemic echoes that earlier economic downturn in many ways, but also brings its own set of challenges, he said.
"It's not just fear of financial ruin and disaster — and we all know large segments of our society are suffering because of this — but it's fear of personal harm and personal loss, and that cuts to a core human emotion that just wasn't there in 2008 [and] 2009," said Hern.
Yet for Hern and other leaders who are battling a second crisis in their tenure as law firm leaders, the recession left them with hard-learned strategies they are incorporating into their current response. And many say the lessons and experience of maneuvering out of the 2009 downturn are helping them weather this crisis.
"We have some wind at our backs now, and as a manager, I have more general buy-in because I've been doing this a long time and I have built up trust. The partners, the associates and staff all have confidence in management, and that makes things easier for me," said Mintz Levin Cohn Ferris Glovsky and Popeo PC managing partner Robert I. Bodian.
As with the recession, there have been hard decisions. Mintz and Clark Hill both instituted pay cuts fairly early into the pandemic.
"We wanted to do it with no layoffs, no furloughs," said Bodian, who came into his leadership position in May 2008, right before the downturn forced layoffs across the industry.
Greenspoon Marder LLP also instituted financial cuts in April with the idea being to save as many jobs as possible in the downturn.
Gerald Greenspoon, co-founder and co-managing director of the firm, said that the biggest difference between the recession and the pandemic is how sudden and more drastic the economic effects have been this time around, as court closures and other lockdown measures prevented attorneys from doing certain work.
"The recession happened, but the consequences took longer to realize," Greenspoon said.
Since making the decision to cut pay, the firm has not had to look at cutting further and has been a bit ahead of revenue forecasts for April and May, said Rebecca Faith Bratter, firmwide deputy managing partner of Greenspoon Marder for the past 18 years.
Looking back, Greenspoon said it was in the firm's best interest to get ahead of the situation and react immediately with cost-cutting measures.
"In [the past] 12 years, the firm has grown significantly, and I believe we have become much more mature and pragmatic in our outlook about the business we operate. We're very practical," Greenspoon said.
All the firms said they were on better financial footing than in the past crisis. Mintz's April numbers were barely off from what had originally been forecast, and over the last five years, both profits and revenues have gone up 50%, according to Bodian. The firm, which ended its fiscal year on March 31, beat its budgeted equity partner profits target by 25% with a record year.
The firm hadn't set partner compensation for the new year, so Bodian said he and other leaders were able to adjust marketing expenses, recruiting expenses, and other various office and section expenses. Mintz also prepaid about $13 million in fiscal 2021 expenses.
"This fiscal year will be our rainy day," Bodian said.
And the leaders reemphasized that key management lessons learned during the recession have helped put them in better positions to weather the pandemic.
"What we learned from that time ... has been to stay diversified to make sure we were not too heavy in one sector or one city or one area of legal services than others," Bratter said.
Since the recession, Clark Hill has also diversified itself, adding practices in banking and finance, government regulatory affairs, oil and gas, and insurance and reinsurance. And its labor and employment practice has been expanding since 2008 to ultimately gain a national footprint, Hern said.
For Hern, the last crisis taught him the importance of listening to the fears of staff members and really understanding what they are going through — and then responding with facts that serve their needs.
"That applied back then, and it applies now," Hern said.
For attorneys and staff, Hern has ramped up weekly meetings with the executive committee. And in the client space, the firm has been continually recalibrating its response and guidance as the science continues to be explored and rules continue to change.
Similar efforts have also been taking place at Greenspoon Marder, where Bratter said "we've had every version of a meeting that you can imagine."
At Mintz, meanwhile, on top of regular meetings, Bodian has taken a page from his 2009 strategy book, making sure to talk to associates and work with them on what the cuts will be and how it will affect them, he said.
"That worked well, and so we did that again this time around," Bodian said. "It wasn't just some edict from management that hadn't been fully discussed and explored in advance."
In 2009, Bodian also took the counterintuitive — and ultimately successful — move of increasing the firm's marketing budget by 25% after the recession. Throughout his career, he said, he has tried to avoid taking what everyone else is doing as his own guideline. In this crisis, he sees putting a stake in the ground and having no furloughs or layoffs as a bold decision he's made for the firm.
"You don't want to have furloughs and layoffs if you can avoid them because, if the thinking is this will come around once the COVID-19 situation takes care of itself, then you want to have your people. It's not a permanent situation and hopefully not a long-lasting situation — it's different that way," Bodian said.
--Editing by Brian Baresch and Philip Shea.
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