As COVID-19 continues, how are bars doing … really?

In the past few months, as we have addressed the many effects of the pandemic on bars and on their members, the underlying theme has been one of positivity: Bar executives, leaders, and staff members have told us about new things they’re trying and ways they’re keeping everyone connected and proving the value of membership.

All of that is undoubtedly true. But there may be other data points, thoughts, and emotions that are more difficult to express in a forum such as Bar Leader. Responses to the 2020 State & Local Bar Benchmarks Survey from the ABA Division for Bar Services bear this out. The full report will be available in December 2020, and a special report focused on the pandemic is available at no cost on the division’s COVID-19 resource page.

Recently, in an article about how to ask lawyers about their well-being, a mental health and recovery expert said always to follow up the question, “How are you doing?” with “How are you doing … really?”

That’s the approach that Bar Leader took with this article: As a complement to the Benchmarks data, we dug a bit deeper than we have before and asked more difficult questions. In recognition of the sensitivity of this topic and in hopes of fostering a more open conversation, we took the unusual step of extending anonymity to everyone we interviewed. All identifying details have been obscured. We have given each chief staff executive and each bar a name that indicates the size and/or type of bar and helps differentiate among comparable organizations (e.g, State Bar 1 CSE; Metro Bar 2), and we have used gender pronouns at random.

We thank all of the bar executives who took the time to share their experiences with us, and we hope other readers can relate to and learn from many of their observations.

The rainy day is here, or is coming

Most bars are seeing membership declines of between 2 and 10 percent, and many are seeing dramatic decreases in other revenue streams, such as CLE, sponsorship, advertising, and space rental. While bars are also achieving savings because of the lack of in-person events, many have adopted deficit budgets for their next fiscal year and either have already tapped the bar’s reserves or expect to in 2021-2022.

Small Bar 1 CSE said that her bar was doing fine for right now, thanks to CLE revenue, a small increase in membership, and the bar’s reserves. The bar is on a calendar year, and she had just made a budget forecast for the remainder of 2020. She predicted a 23 percent drop in revenue, partially offset by a 14 percent decrease in expenses, with reserves filling the remaining gap.

Metro Bar 1 has a July 1-June 30 fiscal year. The bar did not have to use its reserves in 2019-2020, but Metro Bar 1 CSE expects that the bar will need about $350,000 from reserves in 2020-2021.

Metro Bar 2, which is on a calendar year, approximately, is faring very well, but this is in part because of a sudden and significant bit of unexpected revenue. For 2021, Metro Bar 2 is planning for a deficit of $250,000, and the board has approved dipping into the reserves—but Metro Bar 2 CSE believes this may not be needed.

A revenue source that supplied about a third of Small Bar 2’s total revenue has dried up during the pandemic. Small Bar 2 is fortunate that its reserves have built up in the past five to seven years, but Small Bar 2 CSE (who has already taken a 20 percent pay cut and reduced some staff from full time) fears that while reserves will help for 2021 and 2022, this approach may not be sustainable beyond that.

Metro Bar 3, whose headquarters building is typically a great source of revenue, is now living off its reserves until in-person events can resume. Metro Bar 3’s membership numbers are up, but overall revenue is down by about $50,000.

Though it has not had to use its reserves, Metro Bar 4 has had a similar experience, in that space rental in its headquarters provided $350,000 a year, which is now out of the picture. Metro Bar 4 has made up a small amount of this loss by selling its services as a host for virtual meetings, on the premise that a client will build the content and Metro Bar 4 will do the rest. State Bar 1 has taken a similar approach and has found it similarly helpful in making a small dent in lost revenue from conference room space.

Throughout her time at the bar, Metro Bar 5 CSE has made boosting the bar’s reserves a top priority, and this is now paying off: Metro Bar 5 CSE predicts that the bar can weather two years of uncertainty before drastic cuts would need to be made.

Some cuts have started, deeper cuts to come

The pandemic-focused report from this year’s Benchmarks survey indicates where some budget cuts have already happened. For example:

• Overall budget cuts have been made by 21 percent of mandatory state bars, 53 percent of voluntary state bars, 68 percent of large local bars (2,000 or more members), and 43 percent of small local bars (fewer than 2,000 members).
  
• Programs have been eliminated by 4 percent of mandatory state bars, 21 percent of voluntary state bars, 35 percent of large local bars, and 48 percent of small local bars.
  
• Staff furloughs have occurred at 4 percent of mandatory state bars, 16 percent of voluntary state bars, 21 percent of large local bars, and 9 percent of small local bars.
• Staff layoffs have occurred at 13 percent of mandatory state bars, 21 percent of voluntary state bars, 35 percent of large local bars, and 16 percent of small local bars.
  

Some CSEs we spoke with for this article, particularly those whose bars are on a calendar year, said they are maintaining fairly well right now but expect to make more cuts in 2021 or in what remains of 2020.

For example, State Bar 1 furloughed two employees in spring, and State Bar 1 CSE expects about 10 layoffs to come soon. She anticipates that few in-person CLE programs will occur in 2021. The bar adopted a budget with a $200,000 deficit, which includes a 10 percent reduction in dues revenue.

Metro Bar 1 CSE’s philosophy when the pandemic started was to avoid making drastic changes, keep everyone employed, and wait the crisis out. But by July, mainly because of big losses in revenue from both CLE and advertising, Metro Bar 1 CSE had to lay off several employees. Metro Bar 1 CSE has not yet asked other employees to take a salary reduction, but this may be coming. She is projecting that CLE revenue for Fiscal Year 2020-2021 will be down by 50 percent and that the bar’s total revenue loss (from various sources) will be approximately $750,000.

Small Bar 3 CSE said he was relieved that the bar was already so lean in terms of staff—Small Bar 3 CSE  is the only staff for his bar—and was able to hold the line by cutting expenses, including a popular in-person event/member benefit whose cost is almost a quarter of the bar’s total budget. He is also not asking for a salary increase or budgeting for any travel or conferences. However, because Small Bar 3 is on a calendar year and had received most of its dues revenue before the pandemic hit, Small Bar 3 CSE says “the wave hasn’t hit the beach” and that things may change considerably once it does.

Member retention requires adapting to generational change

In recent years, many experts have advised bars to diversify their revenue sources rather than rely so heavily on dues. However, State Bar 2 CSE pointed out that dues revenue has been among the most stable sources and that organizations that rely more on diverse sources of nondues revenue seem to be feeling more of a pinch. Indeed, several bars we spoke with are seeing smaller dues losses than expected. But many face challenges as senior lawyers retire or pass away, large firms tighten their belts, solos and small firms experience their own struggles, and both new lawyers and those with five to seven years of practice bring different priorities and expectations to the question of whether to join the bar.

Some bars reported either slight losses in membership, steady numbers, or even an increase. Those reporting a more substantial loss seem to be especially struggling to attract younger members to offset the senior members who are now leaving. For many, this trend was already in place, but COVID-19 has caused it to accelerate. For example, State Bar 1 CSE reported that many senior members are now retiring because they didn’t want to practice virtually. State Bar 1 offers a discounted rate for senior lawyers, but many are leaving the bar once they leave their practice. Small Bar 4 CSE notes that generational change is now becoming quite apparent as several senior members have died in recent months and as fewer young lawyers join the bar. The bar’s budget for 2021 includes a 4 percent decline in membership.

Small Bar 2 CSE noted that generational change can also mean cultural change that is not always comfortable for all members. Particularly, younger members want Small Bar 2 to speak out on issues involving diversity, equity and inclusion. But when Small Bar 2 issued a statement after the shooting of George Floyd, some older members responded negatively, and Small Bar CSE 2 wonders if they will drop their membership as a result.

To offset trends that been accelerated by the pandemic, many bars are doing heavier outreach and thinking of new ways to offer value. For example, many solo and small firm lawyers have chosen not to renew their membership in Metro Bar 4, which was also on the verge of losing several large firms that typically paid for membership. Metro Bar 4 has now developed a discounted membership deal for large firms and new CLE programs to teach experienced lawyers how to practice in a new area.

Similarly, State Bar 4 (which is steadily losing senior members) is working to retain members through heavy outreach to law firms and by allowing firms to pay dues in two installments. State Bar 4 also shelved a dues increase that was planned for 2021 and is being generous with dues reductions or waivers because of hardship. This echoes Metro Bar 4 CSE, who said his bar is determined not to lose members because they can’t pay—so the bar has to be flexible and creative.

In April, Metro Bar 6 moved forward with a previously planned membership campaign that featured members of different ages and backgrounds expressing why they belonged to the bar. The campaign had no cost and gained the bar 80 new members, none paying a discounted dues rate. Metro Bar 6 launched another campaign in September, this time offering 15 months for the price of 12; this brought in another 20 new members. Metro Bar 6 CSE said that the bar has also done a good job demonstrating value via communications and programming that address a variety of needs in a challenging time. The bar budgeted for a 5 percent membership decline but will actually come out ahead. 

When we spoke, Small Bar 3 CSE was preparing the bar’s member recruitment messages and planned to acknowledge the difficulties of COVID-19 and the ways that membership in Small Bar 3 is a good value during this crisis. Small Bar 3 CSE believes he has an imperative to try new things and also to communicate differently. For example, with in-person events (including the one that was a popular member benefit) off the table for now, Small Bar CSE 3 is seeking interesting cultural events and other experiences that members can enjoy virtually.

Virtual events present big opportunities, some challenges

Among the many things that will be remembered about the pandemic, one of the more positive ones may be that the necessity of meeting remotely prompted many to use new, virtual platforms—and to discover that this format has sparked engagement and attendance in ways they hadn’t predicted. Indeed, virtual meetings feature prominently in this issue of Bar Leader, not only in an article about the future of event planning, but also in an article highlighting what has been positive about 2020. Many of the CSEs we spoke with for this article noted that while they look forward to resuming some in-person events, they are excited to continue to offer some virtual events even once they no longer have to do so.

For example, Metro Bar 6 CSE said that for the first time, perhaps ever, his bar is serving its entire county, thanks to the ease of virtual participation. By the end of September, he said, 3,200 different members had registered for events in 2020—and about 1,200 of them didn’t attend any bar events in 2019. Similarly, Small Bar 3 CSE has been excited to see different members, especially younger members and women, at virtual events from the ones who typically attend in person. State Bar 5 CSE said virtual programming is widely preferred by members with fewer than five years in practice, and the bar will retain some virtual events even once live ones can resume. State Bar 5 CSE said this is part of an overall plan to more directly deliver programs that appeal to younger members rather than expect them to find and attend what the bar already offers.

Metro Bar 5 CSE noted that while people are missing the energy of in-person meetings, CLE now has better attendance because no one has to drive into the city. Metro Bar 7 CSE said that it’s easier to get better speakers for virtual lunch events than it was when they were in person, and that the bar doesn’t need to pay for space. Going forward, the bar might alternate the format, between virtual and in-person, for this monthly event.

State Bar 4’s virtual annual meeting was offered at no charge. Of the 870 members who attended, 500 had never attended the in-person event. The majority of members now say they want a hybrid annual meeting from now on. State Bar 4 has adjusted its strategic plan to accommodate this new approach, and has also updated its bylaws to allow virtual board meetings.

But the many positives don’t mean that virtual meetings are without any cost—both figurative and literal. When his bar held a socially distanced outdoor event, Metro Bar 7 CSE was reminded how badly people want to see each other. Small Bar 2 CSE noted that the novelty of virtual events has long since worn off. State Bar 2 CSE is glad the bar had already budgeted for an increase in technology, because live streaming is expensive. Small Bar 2 CSE said that the bar needs part-time help for virtual meetings. Volunteers used to help at in-person section events, but this doesn’t work for virtual events.

State Bar 5 CSE noted a significant drawback to virtual platforms for events previously held in person: Only about 30 percent of the sponsors for State Bar 5’s in-person events converted to sponsoring the virtual ones. Most said their marketing budgets had been cut and that virtual meetings weren’t worthwhile because of their limited face-to-face networking.

Small Bar 4 CSE is concerned about a movement toward 100 percent virtual CLE and whether this will remain the case even once COVID-19 is no longer a factor. Once people can meet in person again without restrictions, they will be eager to do so, Small Bar 4 CSE believes. Because this is a real niche for small bars, she wonders how other small bars are adjusting their business models in light of this perhaps permanent shift. At the same time, Small Bar 4 CSE is in no rush to resume in-person meetings until they are fully safe. Indeed, some Small Bar 4 meetings and events are now a hybrid of in-person and virtual, and Small Bar CSE 4 noted that no asked whether she was comfortable with this.

Some CSEs indicated that, regardless of the event format, the financial impact of the pandemic might continue to put a damper on professional development and leadership training for bar leaders and executive staff well into the future. For those CSEs, the budget line for their own professional development was a logical place to cut—and two CSEs specifically mentioned that it will be a long time before they participate again in National Association of Bar Executives events in which they were previously very actively involved.

Roles, relationships, and emotions

Several CSEs indicated that the pandemic had sparked some rethinking or new discussions regarding the respective roles of the CSE and the president and board—and new realizations about how these roles may shift during a crisis. Most boards continue to be engaged and are thinking about strategy, but when it comes to significant budget cuts, several CSEs said they recognized that they will have to be the ones to propose the significant adjustments. Board members’ role as ambassadors and in cultivating connections with members has taken on even more importance during the pandemic.

Some CSEs indicated new sources of tension between themselves and the board. For example, if boards do not engage fully in the financial pivots that are required, then CSEs may take on not only the work of attempting to lead those changes but also significant emotional stress. Another source of frustration that was noted was cases in which the CSE is aware of changes in the profession (exacerbated or highlighted by the pandemic) that may directly affect the bar, but the board is less willing to acknowledge and confront those changes.  

While many bars started the pandemic with the idea that “We’re all in it together” and that remote work had some positive aspects, this appears to be beginning to fray. Here are a few insights that were shared, on the subject of emotional well-being during the pandemic:

• Some bars are seeing an increase in stress and tension among employees lately because the end of the pandemic is not yet in sight and also because it’s easier to misunderstand someone’s tone while working remotely.
  
• Some CSEs face additional stress and burnout because either a staff member or board member has tested positive for COVID-19 or is actively experiencing symptoms.
  
• Several CSEs indicated they were drawing support from one another, via weekly calls among CSEs from comparable bars or by connecting with colleagues in NABE and the regional bar conferences. One CSE noted consistently hearing during those calls that CSEs and other bar staff are working harder than they ever have before.
  
• One CSE indicated that fall has been an especially difficult time for her bar’s members and leaders, in terms of mental health, and that she and the president have had difficulty keeping their own spirits up in order to rally others.
  

Where the CSEs we spoke with feel the most hope is the possibility of trying new things. Now is the time to take some risk, and even to fail at some things, Metro Bar 4 CSE believes. State Bar 1 CSE is concerned about all bars’ future viability, especially if they don’t take this opportunity to shake things up. Small Bar 1 CSE is encouraged that even now, members and others will support the bar’s mission, as long as the bar keeps moving forward.

“It’s exciting to be in a moment when we can reinvent it all,” said State Bar 4 CSE. Small Bar 3 CSE echoed that sentiment and noted that the downside to the stability that his bar enjoyed before COVID was a lack of innovation and creativity—both of which are now required.

“We were a predictable bar before,” Small Bar 3 CSE said. “Nothing can be predictable anymore.”