Using data to analyze COVID-19 impact on law firms

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On Monday, March 9, most attorneys went to work as usual. No one predicted that by Friday, March 13, they would not be returning to their law firms for months to come.

“Basically, in just two weeks we got booted 20 years forward from the traditional practice of law,” said Sharon Nelson, president of Sensei Enterprises, a digital forensics, information technology and cybersecurity firm in Fairfax.

COVID-19 has had a monumental impact on Virginia legal practices. Attorneys suddenly had to adjust to working from home; in-person client meetings transitioned to phone calls; mediations began taking place via web conferences and electronic notarizations became more widely acceptable than ever before.

For a while it seemed that these “unprecedented times” would return to normal by June 10, the day Gov. Ralph Northam’s stay-at-home executive order was scheduled to end.

Although businesses are reopening and society is slowly phasing back into public interactions, COVID-19 seems to have created a “new normal” for all, and the legal community is no exception.

“The landscape is shifting for law firms,” said John Simek, vice president of Sensei.

Returning to the office

Nelson and Simek have reviewed a range of data to gauge both the immediate and long-term impact COVID-19 is having on businesses in Virginia and nationwide.

The Society for Human Resources Management (“SHRM”) conducted a survey in June that found 45% of workplaces don’t have a return-to-work date. Another June survey by CNBC indicated that many companies expect 50% or more of their employees to be coming back to workplaces in September.

But Nelson isn’t so sure, especially after Google’s announcement last month that they would continue to allow their employees to work from home until July 2021, delaying a return to the office originally planned for the end of the year.

“For large firms, one of the things we’ve heard is they’re in the race to be the last to reopen. You open up too fast and people get sick, you’re likely to get sued.”

— Sharon Nelson, president of Sensei Enterprises

“We know that many large companies, like Freddie Mac and Capital One, are planning to work from home through the end of the year,” Nelson said. “What we’re imagining now, with such a big player making this call, is that others will do the same thing.”

Anecdotally, Nelson said that many of Sensei’s IT clients have said they plan to either reopen in 2021, or reopen this year and allow any employees who wish to continue working from home to do so.

One of the biggest concerns for law firms considering reopening is liability.

“For large firms, one of the things we’ve heard is they’re in the race to be the last to reopen,” Nelson said. “You open up too fast and people get sick, you’re likely to get sued.”

Another issue is that employees are reporting more and more that they want to continue working remotely even after the coronavirus is contained. According to Nelson, global workplace analytics found that 80% of employees want to work from home at least “some of the time,” while a May survey by GlassDoor indicated that 67% of employees want to work from home indefinitely.

Work from home “solutions”

If law firms continue to operate remotely, Nelson and Simek anticipate that their budgets will be allocated a little differently next year.

According to the research firm Riverbend, last month 94% of business “decision makers” reported having technical difficulties while working from home. These issues include poor WiFi connections, poor video quality during meetings, frequent disconnects from corporate networks, slow file downloads and long response times overall.

As a result, 72% of business leaders said they plan to invest in work from home solutions.

Simek said this will likely be offset by reduced lease costs, as 43% of business leaders anticipate “future savings” on office space in the next few years.

Increase in data breaches

Simek suggested there’s another major investment law firms will soon have to make: cybersecurity software.

Ransomware — a type of malware that threatens to publish the victim’s data or block access to it unless a ransom is paid — has become a bigger concern for law firms than ever. But the problem is presenting itself a little differently than before.

“Ransomware has morphed,” Simek said. “It’s no longer, ‘Hey, we’re going to encrypt your data, and you pay us to get your data back.’ Now, [hackers] are trading [in] data, so you’re getting hit twice.”

He explained that hackers are now threatening companies and law firms with the possibility of “auctioning off” their data, pressuring firms to pay additional money for their information to not be sold.

This trend has resulted in an increased focus on cybersecurity, Nelson said.

“Whether it’s more modern equipment or software to look for threats, [law firms] are willing to spend some more money on security,” she said.

Simek added that law firms have become more likely to conduct security assessments in recent months. Some are paying for a test to determine the risk of their security being breached, which essentially means hiring an “ethical hacker” to assess how easily data can be accessed.

“Firms are asking, ‘Our security is terrible, how did we get into this position?’” Nelson said. “And they are willing to spend money and time to correct their security.”

Both Nelson and Simek said law firms and businesses are buying laptops for employees who were previously using personal devices.

“At the beginning, a lot of folks were on home machines. We’re slowly seeing firm owners say that wasn’t a good plan,” Nelson said. “They’re now purchasing machines they can control, which is much, much safer.”

“That’s a good move,” Simek added. “Since [law firms] see people working for home much, much longer, and some of them may be doing so permanently, [firms] now see the wisdom of providing those machines.”

Business is increasing … to an extent

According to Clio, a legal technology company, cases are coming in and monthly billings are “bouncing back.”

The company reported other signs of recovery across all practice areas. In June, 22% of law firms nationwide reported hiring back furloughed or fired employees, and in July, 68% of law firms were more prepared to deal with the challenges of maintaining firm operations, “even in the event of future waves of coronavirus outbreaks.”

Despite this good news, Nelson is wary of data indicating that although clients are “ready to seek a lawyer for legal problems,” 50% of them say they can’t currently afford legal help.

“It’s a confusing time. The stats aren’t telling you a whole lot because they’re trending in different directions,” she said.