The Changing Legal Landscape in the Wake of COVID-19

As the global population grapples with the unprecedented health and economic fallout of the COVID-19 pandemic, law firms have an opportunity to modify how they conduct business and service their clients. While dozens of law firms have announced cost-cutting measures such as layoffs, furloughs, and salary cuts, any near-term slowdowns in legal systems should give way to an upturn in litigation and restructuring practice areas. In addition to stalled litigation matters coming back to life, the legal industry should expect a surge of COVID-19 related litigation. Court filings have already shown a rise in protracted litigation related to COVID-19, and along with it, large-scale discovery. Some examples of the various types of COVID-19 related litigation include:

• Insurance coverage suits arising out of businesses disruption claims
• Class action claims brought by shareholders concerning statements and omissions regarding the impact of COVID-19 on operations and performance
• Consumer claims based on the cancellation or disruption of events
• Wage and hour, workplace safety, paid leave, WARN Act, ERISA, employee privacy, worker classification, disability accommodation, and discrimination claims
• Class action claims by students related to campus closures, access to resources, and future operations
• Breach of contract disputes arising out of foreclosures, bankruptcy, and scrapped real-development plans

While law firms may see an increased demand for certain legal services, their clients will be weighing the significant risks facing the global economy as countries slowly reopen. Although analysts are predicting significant third quarter growth, the general consensus is that even the expected rapid recovery will still leave the United States economy with an output gap. As often happens during economically perilous periods, companies will reassess how they use and pay for legal services. Law firms can anticipate such assessments by fostering open and honest communication with clients, while exploring innovative and flexible ways to deliver legal services.

Businesses are experiencing the same anxieties felt by individuals during these uncertain times. Accordingly, law firms should assure clients they have a partner to help them through the forthcoming economic recovery. Law firm partners should connect with clients and truly listen to and process clients’ concerns and needs. Firms should then take concrete steps to adjust to clients’ shifting needs in the current environment. Receptive firms will take the lead in providing legal solutions, anchored in hard data and impartial advice. The deluge of information currently being churned out can confuse clients. To avoid getting lost in the fray, firms should highlight how they can leverage their specific expertise and resources to assist clients. Clearly defined solutions tailored to clients’ unique situations will stand apart from generic articles and email blasts.

The projected increase in COVID-19 related litigation coupled with economic uncertainty will also place pressure on pricing and require shifts to alternative delivery models. Flexibility and creativity are essential to addressing clients’ pricing concerns. Law firms may consider pricing models that offer clients greater cost certainty by capping fees or by implementing outcome-based fee structures. In lieu of across-the-board rate reductions, firms may elect to offer one-time discounts, flexible payment terms, or credits toward future legal services.

Law firms should also evaluate opportunities to collaborate with alternative legal service providers to help reduce costs and increase productivity.  Alternative legal service providers can provide litigation support, legal research, contract review, and/or e-Discovery services that simultaneously provide access to expertise or resources firms may lack in-house and allow firms to use existing resources more efficiently and strategically.

The COVID-19 pandemic has compelled innovators across industries to identify underutilized tools and implement alternative work paradigms. Businesses, including many law firms, have adjusted with surprising speed and ease. Entrenched ways of doing things have been supplanted with effective and efficient alternatives that, in many instances, have led to increased productivity and output. Law firms would do well to build upon that momentum to provide customer-centric, data-based legal solutions.  Guiding clients through the current social and economic storm can and will produce stronger, more productive partnerships.