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International (Global) Strategies | Articles

The COVID-19 impact on the legal industry

The global COVID-19 (coronavirus) pandemic is affecting nearly every industry and law firms are no exception.

Some larger organizations are already mulling layoffs, closures and pay cuts while small firms, whose staff may already work remotely, may be better equipped to handle long closures but could struggle with business development and revenue.
Some larger organizations are already mulling layoffs, closures and pay cuts while small firms, whose staff may already work remotely, may be better equipped to handle long closures but could struggle with business development and revenue.

While work continues for many, conferences, court appearances and in-person meetings are likely on hold until further notice. Depending on the size of the firm, the situation may be causing varying levels of impact. Some larger organizations are already mulling layoffs, closures and pay cuts while small firms, whose staff may already work remotely, may be better equipped to handle long closures but could struggle with business development and revenue.

Prior to the  pandemic, the financial outlook for firms weren’t optimal as only single-digit growth was projected for 2020. Newer forecasts could be even more challenging.

Some firms are delaying invoicing or reducing pricing in order to retain existing clients and avoid losing business. While understandable in this climate, such moves were also employed during the 2008 financial crisis, and although some clients were retained by the action, firms found it difficult – or in some cases impossible – to return to their normal pricing structure and had to operate under permanently lower fees.

For intellectual property lawyers and those that work with international parties, the recent wave of foreign currency fluctuation means that once-stable fees are much more unpredictable. If a firm received a £5,000 invoice from a UK business, it would cost around $3,900 USD on March 11. That cost jumped to nearly $4,400 less than two weeks later.

Even receiving funds from overseas can be more costly. If foreign currency is accepted through a traditional bank transaction, there is typically a standard fee associated with the processing, on top of the exchange rate. If a firm accepts fewer incoming payments or lower cost amounts, that standard fee will remain the same, eating into their profits.

That is not to say that firms cannot look to streamline expenses and reduce their costs. There are a number of actions legal firms can take to strengthen their position during this downturn, including examining all of their costs to determine unnecessary expenses and deploying technology to maintain their work levels in a remote environment. Some experts even suggest expanding the firm’s areas of focus to better reflect in-demand sectors such as healthcare.

It’s also important to note that most firms struggled after the 2008 recession, causing them to make adjustments and enact change, which, in many cases, may have reinvigorated their businesses during the challenging era. Many firms are heading into this new downturn in a stronger position than the last crisis. A number of firms enabled new technology to replace tedious tasks and found ways to emphasize their unique value to clients.

Regardless of a firm’s current challenges, there’s still time to assess the situation and take action to streamline operations. Feel free to contact us for information on how we can support your firm international payments.