Volume 19, Number 4
June 2002


Steps to Take in a Recovery Effort

PLANNING

Planning for Disaster

By Suzanne Rose and Jim Calloway

On May 3, 1999, multiple thunderstorms produced many large and damaging tornadoes in Oklahoma, including an F-5 magnitude monster that cut a half-mile-wide path of destruction through Moore and south Oklahoma City. A few months previously, in January 1999, a devastating tornado tore through Clarksville, Tennessee, destroying many law offices and the courthouse and devastating the legal community. The year before, yet another tornado ripped its way through the heart of downtown Nashville.
Proximity to the tornadoes has given the authors of this article a close-up perspective on disaster planning. As we all realize after the terrible events of 9/11, disasters do come at any time and in all shapes and sizes, from a fire that destroys a law firm's premises to a lost purse containing identification and credit cards.
Your law practice can, and even may, survive a disaster without a disaster plan, but having a plan clearly increases your chances of success.

A Tale of Two Law Firms
The separate tornadoes that touched down in Nashville and Clarksville within a year of each other impacted two law firms very seriously. Neither of the firms had a disaster plan, even though each numbered nearly 15 attorneys (plus staff).
Each of these law firms survived. The Nashville law firm was not totally destroyed. Even though the tornado hit during business hours, no one was hurt; no information was lost. They did not even lose telephone service. Within a matter of hours, help was on the way to assess damage, secure the building, and begin the cleanup. Their biggest effort went into drying the papers and files that were soaked.
The Clarksville firm was not quite so fortunate. Its building was completely destroyed. Paper documents were lost. The file server, which stored the majority of client files and case information, was saved only when one of the partners-facing the threat of jail time-broke through the yellow police tape to get into the smoldering building and pull out the file server.
The Nashville firm estimated that its income was not significantly affected as a result of the tornado. However, it cost them $7,000 just to run dehumidifiers and fans for days to dry out the paper documents. Digital computer information and most client files were unharmed. Completing settlement with the insurance company took nearly two years.
The Clarksville firm lost approximately 60 days of billable time for each attorney. The impact on the bottom line that year was significant, with revenue dropping by one-third. In addition, the firm lost money for uninsured cleanup and major building replacement costs due to inadequate insurance coverage and undervaluation on insurance policies for the office building it owned. The insurance settlement took more than two years, but the practice survived.
How would your firm do in a similar scenario?
Both firms had luck on their side. Firm size was on their side because office managers and administrative staff carried on the cleanup process while the attorneys carried on representing clients-and billing time. Technology was on their side. Each firm had automated its word processing, time and billing, firm accounting, and calendar systems. File servers were undamaged or salvaged. And financial strength was on their side-professionally and personally. It could have been much worse.
The obvious question is whether you want to bet the survival of your business on being lucky. Could your practice survive this level of loss, given your present state of readiness? Could you personally survive? Instead of waiting to find out, start here and review the following basics of preparing for and recovering from disasters.

Drafting a Disaster Plan
Lawyers spend a lot of time drafting documents. Putting something in writing, on paper, produces a sense of stability and permanency, even in this age of digital documents. Preparing a written disaster plan is crucial, as is creating a disaster recovery file that includes photocopies of important materials, printouts of client contact information, tech support phone numbers, serial numbers of all hardware and office equipment, and other stray bits of information. A physical file folder makes it convenient to drop in new or updated information when you buy new software or hire a new employee, instead of putting it aside with good intentions. Include a printout of the office calendar or docket, and update it regularly. Make at least two copies of both the plan and the file; store one in the office and one off site.
The plan should cover the following points:
1. Disasters your firm should expect. Possible catastrophic but predictable events include the loss or extended illness of key staff or attorneys; computer hard-drive failure, either at a workstation or of the main file server; telephone or power outages; fire; water damage from sprinkler systems or floods; tornado or hurricane; and loss or theft of client files, credit cards, personal identification, or other documents.

2. What could be lost? Could you survive without it? Here are a few examples: 
o Key staff. Does the person have sole possession of critical information (i.e., important dates, passwords to electronic files and information, file and document locations, both physical and electronic), vendor information, combination or keys to the safe, accounting information, or trust account information? Everything entrusted solely to one person can vanish. Sharing information, formalizing certain procedures, and centralizing systems like calendars and billing can help mitigate loss.
o Data. If you regularly back up software and data daily, your data loss can be minimal. If you do not make backups or do so haphazardly, you could lose a lot of work product and billable time-not to mention the firm's intellectual property like forms, briefs, and research. Recreating data from paper copies, even ones that can be scanned, is a time-consuming process.
o Efficiency. Equipment breaks and causes downtime. Know whom to call for repairs, and have model numbers and service contract information available.
o Member or partner. If you die, what critical information will die with you-especially what someone would need to protect your clients' interests and eventually take over or close your practice? Who is going to close your practice? How will they know what to do? Failure to plan will be disastrous not only to your practice and family but also to your clients' interests. You have an ethical, professional, and moral obligation to protect your clients-even during a disaster.
o Physical office space. Is your practice organized so that you could communicate with employees and clients and continue business if the office and its contents were damaged or destroyed? Do you have adequate backup in your home office, for example? Do employees have a telephone tree?
o Income. Are you prepared personally and/or professionally to withstand loss of income while you and the business recover?
o Identity. Although this type of disaster may seem minor compared with a tornado or a fire, identity theft is growing and may be more likely to affect you than a natural disaster. The consequences of losing a purse or wallet are no longer insignificant. Be sure to have access to the name and account number of every credit card and account, with the correct phone number for reporting a loss. One quick way to prepare this part of the disaster file is to take all of your cards to your photocopy machine, lay them on the screen, and copy. Then turn them over, leaving them in the same location, and copy the reverse, which should contain the 800 number to report a loss. (You may have to enlarge the copy of the backs so the number is readable.)

3. Prepare the firm for any of the following:
o Disability or death of a lawyer. This eventuality has material consequences that are similar to those from other types of disasters. And solo practitioners have a special challenge to provide for someone who will be able to take over or close your practice. An agreement with your backup attorney must address the specific duties the person will perform, client confidentiality, and compensation. The office should be organized, particularly if you have no or little staff, so that the backup attorney can easily notify clients or comply with critical deadlines. Many state and local bar associations have similar materials available.
o Damage/loss of office and contents. Again, backup copies of all files are essential. Talk with an insurance agent about business interruption insurance coverage.

4. Put it in writing. Put in writing the steps that will have to be taken in the recovery effort and who is responsible for seeing that they are completed. Include the location of critical information and instructions for accessing it as well. (See "Steps to Take in a Recovery Effort,") Personalize this recovery plan for your firm by
o Identifying your most critical systems.
o Identifying potential disasters (as we have already done) for your firm.
o Identifying steps needed to begin recovery from such events.
o Assigning responsibility for carrying out these steps to the appropriate people.
When the written plan and accompanying folder are completed, docket for review and update, store copies off site, and distribute the plan to all firm members and employees. (Obviously, omitting personal information like account numbers and such is advisable.)

5. Don't stop before you start! It's easy to be overwhelmed by considering the myriad possible disasters and their contingency plans. The temptation is to procrastinate instead of tackling it today. Here are some suggestions to get you started and keep you going:
o Review these checklists and mark the protections you already have in place. That should make you feel less overwhelmed.
o Tackle the plan in small, digestible bites, starting with the tasks most easily implemented to protect the most critical components of your practice.
o Delegate some of the tasks to staff, and hold monthly meetings to assess and reinforce progress.
o Designate a future date for reviewing and updating the plan and backup file.
o Keep going until you are satisfied that everything possible has been done to protect your firm.

Some people in your firm may balk at the time or money spent to implement planning and recovery systems, even in the wake of the September 11 tragedies. Remind them that these same systems will enable them to practice more efficiently-and profitably-as soon as they are implemented. Then, if disaster should strike, you will be a hero for taking the steps that protected the firm from total ruination.

There is perhaps no better step to help your business survive a disaster than to automate paper systems immediately and secure electronic data with daily backups and off-site storage. Far too many lawyers still rely upon paper systems, e.g., card indexes with client contact and conflicts information, paper desk calendars with critical date entries, or time entries on paper slips stored in the client's paper file to be billed when the file closes. Paper is easily destroyed by water and fire or just blown away-unless you're really lucky.
Do you want to bet on that?


Suzanne Rose is the risk manager and law office management consultant for the Tennessee Bar Association. She can be reached at srose@tnbar.org. Jim Calloway directs the Management Assistance Program for the Oklahoma Bar Association in Oklahoma City and is a frequent speaker at legal technology and bar association conferences. His e-mail address is jimc@okbar.org.

 

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