Why COVID-19 Has Turned Lawyers Into Business Consultants

Mark Lello, Partner & Notary Public at Parker Bullen LLP, shares his opinions with Lawyer Monthly.

In normal times, an intricate web of advisers has always surrounded a business. Suppliers, customers and professional services providers – let alone friends and family – all added vital knowledge and insight. For the time being, at least, COVID-19 has stopped all that. The formal and informal advice and support network has all but collapsed.

It is only when we lose it that we realise the importance of such valuable business osmosis – it informed, updated and guided our thinking.

Many business issues were resolved informally. The fine print at the bottom of a contract was ignored. Before COVID-19 a simple phone call to apologise and say a shipment would be delayed by a couple of days normally resolved a problem. Not anymore.

When we finally emerge from lockdown, the business environment waiting for us is likely to be very different, and far colder. It has become a very lonely place running a business right now, and in my experience few business owners are prepared for what happens next.

It is only when we lose it that we realise the importance of such valuable business osmosis – it informed, updated and guided our thinking.

They didn’t teach holistic advice at Law School

Looking on the bright side, while the pandemic has brought personal and professional pain to many business owners, it has also often delivered insight and understanding of how business can work differently.

During lockdown many businesspeople will have been doing some soul searching and hypothesising about different ways of working long term. The problem is they often had no one to discuss this with. For example I have recently had discussions about whether a business actually needs multiple offices or whether some staff might voluntarily work from home. Similarly new business practices have raised questions about staffing and whether certain roles are still necessary given newly discovered ways of working.

This is where the legal profession can step in, as one of the key skill we often overlook is that of an unbiased business consultant. And, while I would hope all solicitors carry out their work with empathy, we also have the ability to address thorny issues that other consultants may find uncomfortable, or just lack experience with.

Bring your risk management skills to bear

At the heart of a lawyer’s job is risk, both managing it and resolving problems when issues occur. What businesses need now is help and informed guidance on how the virus puts their business at risk, be it in employment, health and safety, contracts or rent negotiations, to name but a few.

As a consultant it is not your job to necessarily resolve these issues, but to help identify them and suggest solutions, which may, but not always, be legal in nature.

The essential concept is to spot clients’ needs much earlier in their business life cycle than when the symptoms show. In a normal legal environment this may be pre-emptively addressing issues such as trade mark registrations, shareholders’ agreements, or terms of business. This can in turn can have a bearing on how and when one spends one’s discretionary ‘marketing’ time.

But in a COVID-19 environment our risk management skills could mean identifying issues that need addressing immediately and could save a business from insolvency.

Reach out – don’t wait for the phone to ring

The importance of being proactive when offering ‘consultancy’ services is well attested. On a personal note it is worthwhile citing an example to show how addressing a problem early without the need for legal intervention can prevent business failure.

Practicing law on the edge of Salisbury Plain has meant that as a firm we have always supported military personnel with their legal issues, one of the most important being employment. Many ex-military personnel choose franchising as a career, both as franchisors and franchisees because the packaged business model offers opportunities to grow a business or provide a structure that gives a novice business owner all they need.

However, our work with the British Franchise Association shows that franchisors often run out of cash between 18 months and 2 years following the launch of their network. The core issue being that both franchisors and franchisees typically lack an understanding of cash flow management.

Rather than being called in to pick up the pieces after the problem becomes irreconcilable we have found that proactively contacting franchisors to discuss their business can unearth issues including refinancing where necessary.

The importance of being proactive when offering ‘consultancy’ services is well attested.

In the COVID-19 environment I would almost guarantee that similar calls to your clients would unearth concerns that otherwise would not be addressed until after lockdown, and potentially too late to resolve.

Mediation and not litigation – But litigation where necessary

‘Food chain hierarchy’ matters in business and having a solicitor support your negotiations can help.

Unfortunately I fear that the collective harmony that we have witnessed over recent months may well vanish when we emerge from lockdown. Broken contracts will be seen as a quick way to bolster a balance sheet and I fear a significant increase in litigation.

Empty bank balances will spark litigation. Big fish further up the food chain are already acting to bolster their cash flow by holding smaller companies to account, to contracts which they have plainly been unable to fulfil. Few predominantly small to medium sized business are prepared for what could be a deluge of litigation claims against them.

Protected claims may be a necessary step for certain businesses, especially given that the limitation period of six years for contracts will still start immediately, regardless of the fact that the Courts will have a backlog of cases when they reopen.

Pre-emptive discussions with litigation funders may also be necessary as business cash flows may not necessarily be able to support prolonged and expensive cases.

Charging like a bull, or a Smart Watch

How you charge for your services will depend on a company’s specific circumstances. A revenue stream based on consultancy alone is unlikely to be successful but in the current market offering a helping hand could reap short and long term business benefits. Even before the pandemic, my experience was that offering some level of business consultancy for free was commercially beneficial.

Legal Doves, not Eagles

This pandemic has put our clients, businesses, homes and health at risk. How we react to their situations now will have long term implications to our standing in the future. In these dark days, this really is our moment to shine.