Coronavirus Upends the Legal World, Lower Revenues and Job Cuts Likely

Coronavirus Upends the Legal World, Lower Revenues and Job Cuts Likely

3.31.2020

By Kathleen Lynn

Law firms are cutting jobs. Solo practitioners are struggling to keep afloat. The July bar exam has been postponed. And attorneys are figuring out how to work remotely, as New Yorkers and other Americans are told to stay home.

This is the new reality as New York’s legal profession faces the coronavirus public health emergency, which has swept ruthlessly across the national and global economy, with legal and business activity drastically slowed in an effort to contain the pandemic.

“Some lawyers are completely without business,” said Libby Coreno, chair of NYSBA’s Attorney Well-Being Committee and general counsel to a developer in Saratoga Springs. “They’re dealing with crushing amounts of fear and anxiety.”

“The scale of the crisis and the impact on the economy — we have not experienced anything like this, I believe, in American history,” said NYSBA President Hank Greenberg of Greenberg Traurig in Albany. Even catastrophes like the Sept. 11 terrorist attacks and the 2008 financial crisis didn’t force an abrupt halt in business and social activity worldwide, he pointed out.

“A lot of law firms went from a year that was probably starting off quite well to being turned completely upside down,” said Jim Cotterman, principal with Altman Weil Inc., a management consultant for law firms.

Small firms are especially vulnerable, because they generally don’t have large financial reserves to get through hard times. NYSBA has set up a task force to help small firms deal with the fallout of the shutdown.

“The economic and social lockdown amounts to a stranglehold on operations and cash flow. Many small firms have already begun making layoffs, and others plan to do so within the next week or two,” said T. Andrew Brown of Brown Hutchinson in Rochester, NYSBA’s president-elect designate.

The economic stimulus law recently signed by President Trump includes aid to small businesses, and small law firms are trying to figure out if they qualify for help. But Brown’s afraid many won’t survive long enough to get the assistance.

Many attorneys have already seen their incomes dry up, Coreno said. The hardest-hit include lawyers who depend on court-assigned work, because the courts aren’t in session except for emergency matters.

“They have no work, none. That has to be terrifying,” Coreno said. Also suffering are lawyers who handle transactions, which have slammed to a halt; and lawyers who do contract work when other law firms have an overflow.

The Attorney Well-Being Committee is sponsoring a weekly conference call every Thursday with a clinical psychologist for attorneys affected by the shutdown, including some who worry that their practices cannot survive, Coreno said.

The crisis has also landed hard on young lawyers and law students, many of whom are burdened with large amounts of student debt. The job market has suddenly taken a hard turn for the worse, with firms rescinding employment offers and eliminating summer associate positions.

And as if that’s not bad enough, the state bar exam scheduled for July has been postponed to the fall, delaying the start of new grads’ law careers. Typically, more than 10,000 graduates take the New York exam each July, Greenberg said. A number of graduating law students have asked to be allowed to practice under supervision while they wait to take the exam.

“It’s an enormously stressful period for them,” Greenberg said of law students and young lawyers.

NYSBA is taking other steps to respond to the crisis, including joining forces with the New York State Unified Court System to set up a statewide network of pro bono attorneys who will assist people hurt by COVID-19 and its economic fallout.

“The virus will present new challenges when we return to our courthouses and adjudicate all the pending cases that have been postponed and new cases that will arise,” said Chief Judge Janet DiFiore.

“When the crisis subsides, we will have the greatest demand for legal services that the state has ever seen,” Greenberg predicted. Many people will be unable to afford an attorney, he said.

In a similar vein, the large New York City law firm Paul Weiss Rifkind, Wharton & Garrison has created a Coronavirus Relief Center online portal, with information about hundreds of aid programs, including federal, state, local and non-profit. It’s aimed at anyone affected by the economic shutdown.

“In this time of fear and isolation, it is imperative that the legal profession fulfill its professional obligation to help the most vulnerable members of our society, especially as the impacts of this pandemic will be felt most acutely by those least able to endure financial hardship,” Brad S. Karp, chairman of Paul, Weiss, said in a statement.

The pain of the virus shutdown won’t fall equally within the law profession. Some specialties have seen business rise already. For example, employment-law firms are busy advising employers how to handle furloughs or layoffs triggered by COVID-19.

Michael Billok, a lawyer representing employers at Bond Schoeneck & King in Saratoga Springs, said he expects a continued need for legal guidance as employers adapt to changes that emerge from the crisis. For example, he said, the Americans with Disabilities Act generally forbids employers from taking workers’ temperatures, but that’s now allowed in the face of the coronavirus. That raises the question, he said, of whether workplaces could take temperatures during future flu epidemics.

Bankruptcy lawyers are also expected to be in demand as the economy craters and businesses collapse. Commercial litigators may be dealing with disputes over deals that can’t go through during the pandemic. And estate lawyers may get more calls as the sometimes-deadly virus reminds older people, in particular, that they need to plan.

But other law firms, especially those serving hard-hit industries such as hotels or restaurants, are at risk. Attorneys doing transactional work, such as mergers or real estate deals, are also hurting as business activity is put on hold.

Many businesses and individuals won’t be able to retain lawyers “because everybody is taking a big hit,” said NYSBA President-elect Scott Karson of Lamb & Barnosky in Melville.

“There are a lot of law firms that are going to be decimated by this,” said John Remsen, president of the Remsen Group in Atlanta, a management consulting firm specializing in legal firms.

“Most managing partners want to try their damnedest to hold on to people as long as they can,” he added. But ultimately layoffs and hiring freezes are likely. Partners may take lower draws. Some firms will merge, and practice groups may jump from failing firms to more solid ground, he said.

“Some firms aren’t going to make it,” Remsen said. “There’ll be more consolidation.”

“This reminds me of early 2009,” after the financial crisis, said Sarah Gold, a solo practitioner specializing in business law in Albany. “A lot of firms put the brakes on everything and said we’ve got to wait to see how this plays out. A lot of firms now may have to wait for the business to come back in the door, and they may not be in a position to hire right away.”

Gold expects her own practice to feel the impact.

“I have a lot of clients in the process of doing things that will have to wait — like leasing a space or selling their business,” she said. “While I’m still getting new work, it’s going to be limited and may dry up.”

In the face of these challenges, Gold will rely in part on her income from a side job as a lecturer teaching business law and ethics at Rensselaer Polytechnic Institute in Troy.

During the pandemic, attorneys will have to use their best judgment to handle matters under current conditions, then revisit them later, according to Tara Anne Pleat of Wilcenski & Pleat in Clifton Park, chair of NYSBA’s Elder Law and Special Needs Section.

For example, Pleat said, she has clients who want to write or update their wills. Normally, they would come to her office to sign the wills in the presence of two witnesses, but now clients are restricted to their homes. So, in some cases, clients are signing their wills at home, in video consultation with the lawyer and witnesses. Once the pandemic passes, Pleat said, the wills can be re-executed with proper formality in person.

Some law firms already had technology in place for attorneys and other staffers to work from home, but others have scrambled to figure it out.

“We’ve seen more digital transformation in the last five to 10 days than in the last five to 10 years,” Greenberg said.

In the future, attorneys and judges are expected to use technology more, after becoming comfortable with it during the pandemic.

“It’ll be just as effective once we get used to it, just as powerful,” said Dan Kohane of Hurwitz & Fine in Buffalo. “It makes sense. Why is it better for me to get on a plane to travel to New York City to argue an appeal, when I can do it less expensively and just as effectively from my office?”

There is a cost to remote work, Kohane and others acknowledged.

“The only thing you miss is the interrelationship between the attorneys at the office,” said Kohane, who says he enjoys working with younger associates. “Mentoring is much easier face to face,” he said.

Still, he added, there’s no going back: “We have to change. We have to recognize the beauty of technology.”

Kathleen Lynn is a freelance writer.