Wisconsin Lawyer
Vol. 79, No. 6, June 2006

Preparing a Disaster Recovery Plan

by Thomas J. Watson

Thomas J. Watson, Marquette 2002, is director of communications at Wisconsin Lawyers Mutual Insurance Co., Madison.

We all saw the devastation caused by Hurricanes Katrina and Rita last year in the Gulf Coast. We know what Mother Nature can do to property and human lives. We don't worry about having hurricanes in Wisconsin, but that shouldn't stop you from thinking about a disaster recovery plan for your law practice. And there is no better time to consider it than now.

According to the National Weather Service, more tornadoes have hit Wisconsin in the month of June (370) than in any other month. For all of 2005, there were 62 tornadoes in the state, 19 more than the previous record set in 1980. You may not think it can happen to you, but don't tell that to the residents of Stoughton, just south of Madison, who were hit last August, or those who lived through the Barneveld tornado in 1984, or the survivors of tornadoes that have struck other locations throughout our state.

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

Expect the Unexpected

Anticipate the possibilities. Even if you never worry about weather-related destruction, 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. Could you handle the extra work yourself? Your computer system could crash. Could your office continue operating seamlessly with a technology failure? What if you lost critical files? Could you recover them?

Reid Trautz, a lawyer and director of the District of Columbia Bar Lawyer Practice Assistance Program who spoke in Wisconsin last fall as part of a law practice seminar, tells the story of a Virginia lawyer who recently was the victim of a fire in his office building. "He had no electricity and therefore no computer service. He had to set up a computer network from his house. The sprinklers in his office went off during the fire, creating flooding problems. These are things you don't think about until they happen to you."

Severe weather or even an office fire 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 bankruptcy within one year of the disaster.

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.

Planning Can Make the Difference

The top four causes of business failures are neglect, disaster, fraud, and the unexpected event. Preventing neglect and fraud is something you can control. But preventing a disaster or an unexpected event is out of your hands. While you cannot determine if or when those events could affect your practice, don't leave yourself open to a malpractice claim simply because you did not plan in advance. Failing to plan can bring down any law firm.

Even in the event of a business interruption, your professional responsibilities to your clients continue, including on-going communication, diligent representation, and confidentiality. Your cases are not put on hold. Clients do not reduce their expectations. 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.

Many law firms commit some of the same common mistakes, all of which contribute to a lack of disaster preparedness. Common mistakes include having:

• no backup of client files,
• inadequate backup of computer files and programs,
• no current list of clients with open cases,
• untimely filing due to storm-related issues,
• no backup of accounting records regarding fees paid and earned, leaving the lawyer and client with nothing to establish the reasonableness of fees, and
• unrecorded, and thus lost, contingency fee contracts.

Have a Good Business Continuation Plan

A good business continuation plan will include a set of procedures that defines how your office will continue to operate 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 don't have the time needed to put together a business continuation plan. In a small office, time away from clients costs them 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, and allow for the possibility of meeting employees at a specific location if your office is not accessible. 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 even if you cannot access 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, test them regularly, and store the backup data off site. You don't want to discover during a disaster that your data backup system is faulty. Trautz says nothing is more important than backing up your computer data. "You have to be able to continue to communicate with your staff, your clients, and your office vendors. That is essential. Those are the people who help you stay in business."

There are several steps you should take to protect paper files before your business is interrupted. Define and identify vital records, those that are essential for your business to continue operating. 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 areas that potentially could suffer water damage. 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 coverage for business interruptions and extra expenses?

Avoiding Malpractice Claims

Excellent office practices mean better and more reliable client service and put you in the best position to weather the storm - and ultimately, to avoid a mistake that could lead to a malpractice claim. When you are confronted with an interruption in your practice, no matter how large or small, whether caused by fire, tornado, computer crash, or the long-term absence of a key partner, how well you prepared for that interruption will determine how you get through it.

When the interruption occurs, you may have to call a trusted lawyer to get an outside perspective. You may have to report a potential malpractice claim if you think you may have missed a deadline (or worse). 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 didn't work. Fix what didn't work. Audit your files.

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 lengthy downtime. The sooner you are back up and running, the more likely you are to continue providing reliable, uninterrupted client services.

Conclusion

Disaster recovery plans are all about your obligations to your clients, your staff, and yourself. They are about making sure your future is secure, even in the face of uncertain future events. Don't put off planning now with the assumption that you have plenty of planning time later. A disaster or a minor office interruption can happen without warning and cost you money and emotional heartache.

Planning and preparation can minimize the impact on your practice. Remember: billable time determines your income, but nonbillable time determines your future.

Wisconsin Lawyer