Disaster Recovery Plan Can Help You Manage Risk

Even when disaster occurs, attorneys still owe professional and ethical duties to clients. Limit your exposure to claims of negligence by developing and using a disaster recovery plan.

by Ann Massie Nelson

Ann Massie Nelson is a regular contributor to Wisconsin Lawyer and communications director at Wisconsin Lawyers Mutual Insurance Co.

WHEN TERRORISTS STRUCK the most prominent icon of American commerce, the bittersweet irony was that business continued, even amidst massive destruction and loss. Many corporations and agencies located in or near the World Trade Center credited their viability to disaster recovery plans, many of which were developed in anticipation of Y2K.

Wisconsin's pastoral setting seems far removed from terrorist targets, yet we need look no farther than our own borders to see that tragedy spares no one. In the past year alone, a tornado ripped through Siren and a flood submerged the Prairie du Chien business district. A major ice storm left many homes and businesses in southern Wisconsin without power for up to two weeks in 1976. And, who can forget the hazardous chemical spill that turned Weyauwega into a ghost town or the cryptosporidium that contaminated Milwaukee's water supply?

Events like these compel us to question our own disaster preparedness. Look around your firm and imagine the worst possible scenario: everything you see - files, computers, office equipment, furniture, calendars, Rolodexes - destroyed.

• How would you fulfill your professional and ethical obligations to clients in the days, weeks, and months ahead?
• If you were unable to practice for any reason, how would your firm manage?
• Could failure to plan for a business interruption be cited as negligence in a professional liability claim?

Consider the following measures to help your law firm continue to serve the needs of your clients.

Adequately Insure Your Firm

Insurance provides the financial resources you need to begin rebuilding your practice as quickly as possible. Many small- to medium-sized businesses purchase business owners' policies that combine property, commercial liability, and business interruption coverage into one. Business interruption insurance typically covers loss of income due to direct loss of physical property. Coverage for income lost as a result of an indirect loss, for example, a power outage, may have to be added by endorsement.

Review your insurance policies or talk with your agent to make sure your bases are covered. You might also consider:

• Extra expense insurance to cover the additional costs - above your normal operating expenses - that you incur to keep your practice open while your building is shut down. For example, you may need to rent temporary office space and computer equipment and install phone lines. Often, business interruption and extra expense coverage are sold as a package; however, extra expense coverage alone may be sufficient, according to the Insurance Information Institute.
• Valuable papers insurance to cover the costs of restoring or replacing documents for which no electronic or paper duplicates exist.
• Known dollar deductible or reduced waiting period, based on your financial ability to share in the risk. Many policies have a waiting period, which can be as long as a week or more, before coverage begins for expenses and lost income.

Back Up Everything, Every Day

A good, basic business practice is to back up all of your electronic records every day. Make sure you also have copies of your operating system available to retrieve the data. Store the backup disk or tape in a secure, off-site location. Periodically test your data retrieval abilities off-site to ensure you have the proper equipment and software to restore your electronic files. A duplicate set of backup tapes stored in a second location provides further security, in the event that the first set is destroyed or inaccessible.

Paper or electronic duplicates of calendars, docket, and contact information for clients, opposing counsel, and courts could be invaluable in a crisis. (See "To Learn More" for Web sites that discuss this topic in depth.)

Develop a Written Disaster Recovery Plan

Every law firm needs a written disaster recovery plan, with copies filed safely off-site. In a small organization, one person typically is responsible for compiling, updating, and executing the plan. Review the plan with all employees and distribute copies for them to keep at home. Elements of a disaster recovery plan include:

• Evacuation procedures.
• Two meeting places where employees can gather - one outside your building, the other well away from the office - take a head count, assess injuries or damage, listen to news broadcasts, and plan for the immediate future.
• A current directory of employees, including home and cell phone numbers, pager numbers, home email addresses, street addresses, and names of emergency contact persons.
• One local phone number for employees to call for information or to report their situation. List a contact person outside your area to notify by cell phone if local phone service is interrupted.

Your firm's managing partner or administrator will need additional information, such as:

• Copies of your firm's insurance policies, including policy numbers, agents' names and telephone numbers, and instructions for filing claims.
• Location of office space you can access immediately for temporary operations. Consider working out a reciprocal agreement with another law firm or your accounting firm. Be sure to include a map in addition to the street address. After a tornado, street signs and familiar landmarks may be gone.
• A copy of your lease and the name and phone number of the office building manager, if applicable.
• An up-to-date inventory of all office equipment, including model and serial numbers, purchase dates and prices, service contracts, and leasing information. This information will be extremely helpful in filing a claim with your property insurer and replacing the equipment you need.
• The location of computer equipment for restoring data, along with the location of your off-site backup disks or tapes.
• Detailed records of firm income, accounts receivable, payroll, and other documentation for filing a claim under your business interruption insurance.
• A recent valuation of your firm property (building and contents) for filing a property insurance claim.

Keep Some Essentials on Hand

When disaster strikes, you may be glad to have a few basic essentials on hand, such as:

• File storage that can be locked. Your duty to maintain client confidentiality continues, even during a disaster. Consider locking your file cabinets at the close of every work day.
• Cash for purchasing emergency supplies and equipment. If the electricity is out, automated teller machines (ATMs) will not work. Neither will cash registers. If you have cash, you may be able to buy what you need. Keep receipts of all purchases for filing extra expense insurance claims.
• Tarpaulins, plastic sheeting, heavy-duty tape, plastic storage boxes, freezer paper (for separating and protecting irreplaceable documents), and other supplies. If a disaster is widespread, you may have difficulty buying these supplies off the shelf. Your property insurance policy requires you to protect equipment and records from further damage.
• A battery-powered radio, flashlights, extra batteries, fire extinguishers, a well-stocked first aid kit, and bottled water.

Remind Employees to Use Common Sense

Even a 15-minute wait outside on a winter day in Wisconsin can be dangerous without a warm coat, hat, and gloves. And, anyone who saw the videotape of women attempting to run from the World Trade Center in high heels recognizes the value of keeping a pair of walking shoes under the desk. Employees also should know to take their wallets and car keys with them in an emergency evacuation. They might not be able to return to the building, but they may be able to drive to safety. Finally, remind employees that their personal safety is paramount. When it comes to serving the needs of your clients, nothing is more important than your people.

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