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    Managing Risk: Prepare a Disaster-Recovery Plan Before Disaster Strikes

    Billable time determines your income; nonbillable time determines your future. You cannot afford not to have a disaster-recovery plan. Take it from two of more than 12 attorneys whose office building recently went up in smoke.

    Thomas J. Watson

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    Wisconsin LawyerWisconsin Lawyer
    Vol. 85, No. 7, July 2012

    DisasterOn Tuesday, April 24, 2012, a fire erupted in an office building in Madison. The blaze caused an estimated $2 million in damage, destroying a large portion of the building.

    One dozen law firms called the building home. Many of those offices were almost gutted, leaving the lawyers scrambling to recover billing records, calendars of court dates, client correspondence, and other vital documentation.

    Those lawyers are probably like the rest of us. The possibility of such a devastating event happening to their offices was most likely the last thing on their minds. Patrick Waters is one lawyer whose office was destroyed. He says he quickly felt a sense of complete disbelief. "When I received a phone call from a colleague telling me that our office building was on fire, I didn't believe her at all. After she explained to me what was happening, however, I went down to our office. Nearly the entire building was engulfed in flames. Once I saw the building up close, I started to panic a bit."

    John Neal, with Stafford & Neal, also saw his office go up in smoke that day. "What I really cared about was getting my client files back. Once I was able to do that, it was just a matter of dealing with all the other stuff like finding temporary office space, then a permanent office, and the list goes on. But at least with our client files back, I could pretty much resume sleeping at night."

    Getting Over the Shock

    Waters says one of the challenges after the fire was dealing with the emotional trauma. "I could see my side of the building was intact, but I also saw firefighters pumping a lot of water into our office suite. Later, word came that the building was too dangerous for the firefighters and first responders and they pulled all of them out of the building. Shortly after that, we were told that a good portion of our building collapsed." The enormity of the loss then hit home with Waters. "All of the work I had done in starting and maintaining my business was in serious jeopardy. I was at my lowest point and was definitely in despair. I was also concerned about my colleagues and the other people in the building, especially those whose offices had collapsed."

    Critical Information to Maintain Off Premises, Key Supplies to Have On Hand

    Critical Information to Maintain Off Premises

    Copies of the following documents and information should be available to you and your firm administrator or office manager in an off-site location:

    1. Your firm's insurance policies, including policy numbers, agents' names and telephone numbers, and instructions for filing claims.
    2. All law firm banking and trust accounts and safe deposit boxes: Where are they? How titled? Who has signatory authority?
    3. Your lease and the name and phone number of the office-building manager, if applicable.
    4. The location of computer equipment for restoring data, along with the location of your off-site backup disks or tapes.
    5. Detailed records of firm income, accounts receivable, payroll, and other documentation for filing a claim under your business-interruption insurance.
    6. A recent valuation of your firm property (building and contents) for filing a property-insurance claim.
    7. A list of all library contents and subscriptions.
    8. A list of pertinent information about office equipment, including furniture, fax machines, photocopiers, dictation equipment, telephone equipment, and so on. This should include serial numbers, purchase date and price, vendor, warranty information, and service contracts.
    9. At least one calendar – paper or electronic.
    10. Clerk of courts and key court personnel contact information.

    Recovery Supplies to Keep On Hand

    • Blankets
    • Cash (ATMs may not be working)
    • Cell phone
    • Cleaning supplies
    • Clothesline or nylon fishing line
    • Disposable cameras with flash
    • Duct tape
    • Emergency food and water
    • Fans and dehumidifiers
    • First aid supplies
    • Flashlights and batteries
    • Heavy-duty garbage bags
    • Paper towels and freezer or wax paper
    • Phone book
    • Plastic storage boxes
    • Protective eyewear
    • Rubber gloves and boots
    • Sponges, brushes, and hoses
    • Tarpaulins or plastic sheeting
    • Tool kit
    • Transistor radio and batteries
    • Waterproof, heavy-duty extension cords
    • Water-resistant color markers, labels, chalk, tape
    • Wet/dry vacuum
    • Wet-weather gear and warm clothing
    • Wheeled cart 

    How does a lawyer carry on? Having a disaster-recovery plan for your law practice before disaster strikes is a good first step. And there is no better time to consider it than now. Just ask lawyers like Waters and Neal who woke up on that Tuesday morning in April thinking it was going to be another routine day at the office.

    Planning now can save you, if a disaster does occur, from interrupted client services, missed deadlines, and lengthy office downtime. All of those can result in losing clients and money or even being the target of a malpractice claim.

    Expect the Unexpected

    Anticipate the possibilities. Even if you never worry about weather-related destruction or fire, there are other business interruptions you must consider. What could go wrong? A law partner with a large caseload could have a serious illness and miss work for weeks or even months. Your computer system could crash. Could your office continue operating seamlessly with a technology failure? What if you lost crucial files? Could you recover them?

    A catastrophic weather event, fire, or other disruptive event could happen at any time. Even the slightest interruption to your practice could be a disaster. According to a University of Minnesota study, more than 90 percent of businesses that are without access to their data for more than 10 days file for bankruptcy within one year of the business interruption.

    If your practice were shut down, even for a short time, the results of that downtime could be devastating. They include:

    • loss of income and clients,
    • loss of potential income and potential clients,
    • lost productivity and idle employee costs,
    • unanticipated business expenses,
    • missed deadlines and appointments, and
    • malpractice claims.

    Waters says he was very lucky, all things considered. "I saved the majority of my client paper files. However, I lost several personal items and all of my office equipment and all of my books, supplies, furniture, computer, and printer. I went to Office Max and Best Buy and bought new office supplies, a computer, printer, pretty much everything that I needed to get back up and running. I decided I would move my practice to my home. Ultimately, it took me about two and a half weeks to get to the point where I felt caught up enough to ensure I would be able to represent my clients effectively again."

    Planning Can Make the Difference

    Even in the event of a business interruption, your professional responsibilities continue, including maintaining communication with your clients, providing diligent representation, and ensuring confidentiality. Your cases are not put on hold. You have the same professional responsibilities you had before your practice was interrupted – whether it was caused by a fire, a computer failure, or the sudden departure of one of your firm's partners. Waters and Neal both made contacting clients a priority. Waters says, "I called them and discussed the situation. To my surprise and relief, all of my clients were understanding and I did not lose a single one."

    Neal says he immediately took steps to hook up a temporary system to get office calls rerouted to cell phones. "Finding temporary office space took about five days. Then we dealt with insurance companies. It was a little more complicated because we owned the office space. But since we had our client files back and our phone hooked up, we were able to respond to calls as they came in. We also updated our website and sent emails."

    Certain mistakes and omissions are common in the context of planning and preparing for a disaster. They include:

    • no backup for client files,
    • inadequate backup for computers,
    • no current list of clients with open cases,
    • failure to duplicate accounting records regarding fees paid and earned, leaving the lawyer and client with nothing to establish the reasonableness of fees, and
    • failure to record contingency-fee contracts.

    Prepare for the Worst – Have a Good Business-Continuation Plan

    A good business-continuation plan will include a set of procedures that defines how your office will continue and how it will recover its critical functions in the event of an unplanned disruption. Some lawyers, especially sole practitioners and those in two- or three-lawyer firms, complain that they do not have the time needed to put together a business-continuation plan. Time not spent on client matters costs money.

    But there's an old saying: billable time determines your income; nonbillable time determines your future! You cannot afford not to have a plan.

    When developing a business-continuation plan, the cheapest alternatives are not necessarily the best alternatives. When do you want to be back up and running? Establish a target recovery time for your practice. Do you want to be operational within four hours? One business day? 48 or 72 hours?

    Establish an evacuation procedure and a plan to notify and account for all employees. Include in your plan steps to be taken if telephone service is unavailable or if your office is not accessible (for example, identifying a place where staff members should meet). All employees should have a written copy of your business-recovery plan and should be aware of their responsibilities in carrying it out. In addition, keep a current directory of employees' home addresses, phone numbers, and emergency contacts. Finally, arrange for an alternative work site so that you can continue operating if you cannot immediately work from your building.

    There are several key elements to a business-continuation plan. They include protecting your electronic data as well as your paper files. Establish program backup procedures and test them regularly. Waters says he is glad he backed up his computer files. "I had my computer backed up with an online service called Carbonite. This was an immense help for me because all I had to do was download my files onto my new computer. Other than that, I never thought this would happen to me. I was terribly lucky to have invested in the backup system. Since I was eventually able to get into my office to retrieve my paper files and I had computer backup, this was not really a problem."

    You do not want to discover during a disaster situation that your data backup system is faulty. Nothing is more important than backing up your computer data. Neal says, "We are doing off-site backup of computer files and we'll do more scanning of closed files."

    When protecting your paper files, there are several steps you should take before your business is interrupted. Define and identify vital records: those that are essential for your business to continue operating. As Neal is doing, scan active files and store the copies off-site. You can store paper files in your office, but keep them in locked metal cabinets that are off the floor, away from possible flooding. Contract in advance with a document recovery service. Make sure the service has expertise in and equipment for salvaging and restoring paper documents. Evaluate the security of off-site records storage. Is the facility staffed? Does it have a sprinkler system and a fire alarm? What insurance does the facility owner carry to cover your property?

    Finally, review your property insurance coverage. Does your policy cover building contents as well as the structure? Do you have business-interruption and extra-expense coverage? As Neal says, "Lawyers should review their coverage, and not assume that it's fine. Make sure you have extra coverage on copiers. They are expensive, and if you burn then, you buy them."

    Avoiding Malpractice Claims

    Excellent office practices mean better and more reliable client services and put you in the best position to weather a storm – and ultimately, to avoid a mistake that could lead to a malpractice claim.

    If an interruption occurs, you may have to call a trusted lawyer to get an outside perspective. According to Waters, colleagues can make a difference, so do not hesitate to seek help. "I sent many emails out to my colleagues and friends asking them for support and in some cases help. In the end, I had so many offers from people to help me by offering office space, conference rooms within their firms, and encouragement to not give up."

    You may have to report a potential malpractice claim to your insurer if you think you may have missed a deadline (or worse), even before the client knows. It may be necessary to let the client know what went wrong. And you may have to transfer some work to another lawyer. After the dust settles, figure out what worked and what did not work. Fix what did not work. Audit your files.

    Thomas J. WatsonThomas J. Watson, Marquette 2002, is senior vice president and director of communications at Wisconsin Lawyers Mutual Insurance Co., Madison; com Tom.Watson wilmic wilmic Tom.Watson com.

    Waters says now that he has lived through his crisis, he is trying to do things a little differently. "I am trying to create a 'paperless office,' but it is very time consuming to do that. As a solo practitioner, I don't really have time to do this consistently, but I am making the effort. In the end, everything turned out okay for me. My insurance covered all my losses, and with the help and support I received from others, the whole ordeal was made a whole lot easier."

    Conclusion

    Disaster-recovery plans are all about your obligations to your clients, your staff, and yourself. If your files are organized and you have taken the steps necessary to preserve them, and you have prepared your staff and your office operations for a potential disaster or business interruption, your recovery period may be short. That is your goal – avoid any lengthy downtime. The sooner you are back up and running, the more likely you are to continue providing reliable, uninterrupted client services. A disaster, or even slight office interruption, can happen without warning and cost you money and emotional heartache. Just ask Waters and Neal what it is like. They lived through it.   




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