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November 01, 2013

Disaster Planning and the Role of Lawyers U.S. Bankruptcy Court, Southern District of New York

By Chief Judge Cecelia G. Morris and Vito Genna

Most organizations do their best to plan for a disaster. Unfortunately, no matter how well thought out a Continuity of Operations Plan (COOP) may be on paper, in the wake of an emergency event, most businesses are left with the feeling that they could have done more. The Bankruptcy Court in the Southern District of New York is no exception. It is unusual in most COOP situations for organizations to get any advance notice regarding impending disaster events. It is even less likely organizations are able to make suitable preparations. In the case of Hurricane Sandy, one of the most destructive and deadliest hurricanes in U.S. history, the Northeast was forewarned of the impending storm. Many thought they knew what to expect and, as a result, created comprehensive disaster plans on both business and federal levels to effectively manage the aftermath of a category-three storm. Surviving Hurricane Irene one year earlier, with its strong wind gusts and heavy rains, left residents of the city with a false sense of security that Sandy, like Irene, would be managed with only minimal collateral damage. The city and its residents felt confident that they knew what to expect. Like most businesses, the Bankruptcy Court in the Southern District of New York updated its COOP and gathered their staff to discuss contingency plans created to keep the court operational. What they couldn’t have anticipated was the catastrophic damage the hurricane would leave in its wake. Flooded subways, power outages, damaged cell towers, impassable streets, and destroyed homes and properties were only a few of the casualties of a storm that left the city’s infrastructure functioning at a minimum or no service for weeks and months afterward. What it taught the residents of New York City and beyond is that disaster preparation is a continual process, always in flux, and requires constant diligence to keep plans relevant and reactionary.

Our court’s first lesson was in 2001 when the World Trade Center disaster became more than just a national tragedy, but a trial-by-fire lesson on emergency planning. 9/11 spawned the birth of emergency planning measures across the nation. It solidified in the minds of federal agencies nationwide the immediate need to design and implement plans that could not just keep businesses operational in the midst of an emergency but would save lives. Best practices, business continuity measures, disaster checklists, and rigorous communication and informational technology failsafes were drafted and implemented.

In organizations such as the Bankruptcy Court, whose mission is to serve its constituents, the individuals involved in planning were just as important as the plan itself. Knowing the hierarchy of needs that exists in the court and developing a plan that spoke to those needs required a well-rounded team that understood the intricacies of court life from the need for physical places to hold court, to the necessity of having a backup server in another state. With input from the clerk’s office, chambers, operations, court services, IT, and procurement, the court developed a COOP that in the end enabled the court to be up and operating within 36 hours of Sandy, although the main courthouse in lower Manhattan was inaccessible for over two weeks.

Prior to the hurricane, as part of the court’s COOP, the clerk’s office staff began to telework one day a month in order to become familiar with the process in case of emergencies. Their proficiency with teleworking allowed operations such as docketing orders and updating the website with emergency instructions to the public and the bar to continue nonstop. (In the middle of the storm, clerk’s office staff from home adjourned calendars.) Critical clerk’s office staff were issued special IDs to allow them to pass through police barricades to reach the isolated courthouse. The emergency notification system that the court had in place was immediately invoked to alert staff to emergency procedures and assignments. Computer system backups off site were activated the weekend before to allow both staff and judges to access computer files. A new Voice over Internet Protocol (VoIP) phone system enabled the court to transfer all calls to phones manned by staff in temporary space made available in the district court even without electricity to the building. Prior agreements (memorandum of understanding) with our neighboring Brooklyn Bankruptcy Court provided chambers and courtrooms for the judges who had to hold urgent hearings. Through tweets and the court’s website, the public and the bar were informed of new locations for hearings.

A critical component of the court’s ability to continue operations without its main courthouse in Lower Manhattan was the cooperation and assistance of attorneys, many of whom were also displaced. More than other agencies, law firms and its lawyers representing distressed debtors and creditors had a vested interest in the recovery of the court following an emergency event. The court entered orders extending filing deadlines, allowing telephonic hearings, and allowing court hearings outside the district. Attorneys maintained contact with the court and judges’ chambers, doing everything necessary to communicate with adversaries, make alternative arrangements for noncritical matters, and coordinate with all parties on emergency matters.

Law firms have an obligation to the client debtors/creditors they serve to secure their confidential files and create plans that are independent from the court. For law firms that are operated as sole proprietorships, they must have a plan in place in the event their businesses are adversely affected by conditions beyond their control. Whether the courthouse still stands in the wake of a catastrophe, the staff in the federal courts will resume business with the resources they have in place for these types of outcomes. It is important that the law firms with which the courts are intimately entwined say the same. Big and small law firms alike have an obligation to their clients to have their own COOP in place that has the ability to respond to a crisis situation with the least amount of disruption to operation. While the court is mandated and obligated to do its part to serve its clients, law firms are equally obligated to do the same. This can be accomplished by building awareness and educating themselves on the courts’ processes including:

  • Establishing a point of contact within the firm whose role is to be aware of the court’s emergency procedures;
  • Building familiarity with the court’s COOP, including its relocation sites and contact lists;
  • Establishing high-level communication interactions between court executives and the firm’s partners; and
  • Becoming aware of the multiple ways the court may resume hearings, e.g., phone and video conferencing, etc.

For outside law firms and lawyers, there can be mutual benefits to brainstorming ideas with the court for creating collaborative emergency plans. The goals of such a partnership are ultimately to protect the interests of debtors/creditors whose financial health is the chief concern of both. With lawyers and the court committed to alleviating the loss that can follow a disaster event, both debtors and creditors can be assured that both agencies have their best interest at the heart of their disaster preparation. Downtime in the face of uncontrollable events need not result in financial calamity if handled with care, concern, and a willingness to do what is necessary.

The authors thank Una O’Boyle, chief deputy, and Stephanie Small, training specialist, for their contributions in writing this article.

Chief Judge Cecelia G. Morris

Chief Judge Cecelia G. Morris began her official tour of duty as United States bankruptcy judge for the Southern District of New York on July 1, 2000, and commenced her service as chief judge on March 1, 2012. She teaches Bankruptcy Ethics at St. John’s University’s LL.M. in Bankruptcy program, and serves as a member of the Judicial Conference of the United States Committee on Information Technology.

Vito Genna

Vito Genna currently serves as the Clerk of Court for the U.S. Bankruptcy Court for the Southern District of New York. Prior to his appointment, Genna served as the Court’s Chief Deputy Clerk and IT director. He currently serves on the Judiciary’s Information Technology Advisory Council.