Disaster Planning: Not If, But When

Reprinted from:
Published on 2/06

"Disaster" aptly describes two events that confronted the legal community almost four years apart: the 9/11 terrorist attacks on the World Trade Center in New York, and Hurricane Katrina in New Orleans. In both shattering events, law firms in each city lost firm members, client records, furnishings and equipment, mementos, their physical offices, their entire practices.

Worst Case Scenario

An e-mail by Professor Michelle Ghetti of Southern University Law Center in Baton Rouge, Louisiana appeared on several blawgs in the days after Hurricane Katrina, and gave this picture of devastation in the New Orleans legal community:

Up to 6,000 lawyers (one-third of Louisiana's total) lost their offices, libraries, computers, computer files, client files - and quite possibly their clients.

The state supreme court and 5th Circuit Court of Appeals buildings were both under water, along with all appellate files and evidence folders/boxes. The city and district courts in as many as eight parishes/counties were under water, as well as three circuit courts - with evidence/files at each of them ruined.

Professor Ghetti asked the unanswerable questions: "What effect will that have on the lives of citizens and lawyers throughout this state and this area of the country? And on the law? What happens when the evidence in their cases has been destroyed? Will the guilty be released upon the communities? Will the innocent not be able to prove their innocence?"

Is Recovery Possible?

Is recovery from such a disaster even possible? The evidence of 9/11 says yes - with the proper planning. Consider the example of 200-lawyer Thacher Proffitt. Three-quarters of its attorneys and staff worked in Two World Trade Center. Miraculously, not one person was lost in the attacks. The firm quickly launched into recovery mode, and their Web site proudly carries an article from The American Lawyer that summarizes what happened then:

The next day a committee of Thacher Proffitt partners, including two who had made harrowing escapes, was out surveying office space in Manhattan, and a truck was on its way to Dell Computer Corporation in Texas to pick up 300 new PCs for the firm. By Thursday, Thacher Proffitt had a handshake deal for three floors in a building on West 42nd, complete with 200 existing phone lines. The following Monday -- only six days after the attack -- staff and computers started moving in. Within two days the firm had its computer systems back up at temporary headquarters in its White Plains, N.Y., office, and lawyers were able to retrieve backed-up data. With help from clients and opposing counsel, they reconstructed files so quickly that less than two weeks after the attack, the firm`s real estate department managed to close a $546 million, 53-property, multi-state mortgage financing deal for Bank of America Corporation, despite the loss of thousands of deal-related pieces of paper.

The Keys to Recovery

"Disaster" for a law firm is not a question of "if," but rather of "when." The only unknowns are what the type of disaster, when it will occur and how bad it will be.

I worked with large firms after 9/11 to create a plan for future disasters (earthquake, fire, plumbing-water leak damage, and so on) and subsequently created a Disaster Recovery Roundtable to facilitate discussion of the whole topic. Certain key lessons emerged:

The real issue is more than recovery, it's business succession - the U.S. Department of Labor says most companies that experience a major disaster are out of business within five years, because only 25 percent of companies have a disaster plan.

Once you do create a plan, review and revise it at least every six months to keep it from going stale and becoming useless Communication is essential, and is even more difficult with people rapidly changing cell phone, numbers, e-mail addresses and employers Creating a plan on paper is insufficient to achieve your goal of recovery and succession Periodically the firm must pretend there is a disaster, implement the elements of the plan, and change those aspects that didn't work as well as desired.

The First Step

The first step to prepare for any disaster is to implement an effective file management system for the lifeblood of a law practice - documents. Lawyers know they have to retain, indefinitely, any valuable property (securities, wills, settlement agreements) that belongs to and has not been returned to clients. Some states extend that to case documents, requiring a lawyer to securely store a client's file for 10 years after completion or termination of the representation. The better approach, of course, is to return property and documents. Have a provision in the engagement agreement that specifies their return by a specific date. This need not include notes and other related documents from a representation, such as pleadings, correspondence and work papers. Periodically purge these, so they do not become a worry in a disaster.

The Detailed Plan

The earlier Thacher Proffit example summarizes how an effective, detailed disaster recovery plan can work. These elements are essential to any such plan, whether you are coping with a major disaster or simply the day-to-day traumas that any firm can face:

  • Conduct a firm risk assessment to review readiness and look for weakness.
  • Prepare a specific disaster recovery plan manual that creates a disaster recovery team and spells out who does what.
  • Review (or establish) your insurance coverage, clearly understand what's included, and consider additional liability coverage for natural disasters.
  • Create a complete inventory and photo-document your entire office with all its contents to prove losses.
  • Create an internal emergency communication system for lawyers, staff, clients, vendors, and the court, incorporating recorded hotline messages and out of area contact points.
  • Have several cell phones for use by firm personnel if phone service is lost.
  • Plan for temporary space by contacting building managers and real estate agents in advance to establish plans that accommodate furnishings, computers and phones.
  • Back up all computer data, and store data backup as well as important records and documents off-site.
  • Consider installing a computer program that will be able to undelete/reclaim files that are inadvertently -- or intentionally -- erased.
  • Have a plan to carry on key practice matters - requesting a continuance or rescheduling a deposition - by referral arrangement with another firm.
  • Keep accounts receivable current so you have necessary extra funds for rent, payroll, settlements and other cash demands.
  • Establish a solid relationship with your banker so you can get an emergency loan.
  • Establish an employee assistance fund to help tide staff over in the event of a disaster, setting it up with employee contributions and matching firm grants.
  • Have a written succession plan, which can be invaluable should a primary rainmaker or managing partner die.
  • Create security procedures to protect your premises and files against disgruntled employees, unhappy clients and deranged strangers.

Challenge Creates Opportunity

I believe that economics normally govern all of our actions. The human impact of a disaster like 9/11 or Katrina is always the first concern, and is certainly the most difficult to deal with. Effective disaster planning can, however, greatly mitigate the economic impact on the lives of individuals within a firm by helping ensure the firm's survival. Where there is trauma, there can be suffering - but there is also opportunity for those who have made the effort to prepare. Putting one's personal and professional lives back together is difficult at best, but having a plan on how to proceed can enable success. Your energy on such effort is like insurance: useless and expensive when not needed, and priceless when needed.

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