Stavros Pavlou | Senior & Managing Partner
Stella Strati | Partner-Corporate, Tax, Private Client
The Covid-19 crisis is first and foremost a humanitarian crisis and one that raises fears for the health of ourselves, our loved ones, our families, our co-workers and friends. The cohesion of society itself is at risk and the survival of vulnerable people and businesses threatened. Institutions such as the health services, governmental authorities, banks, even organised religion are all tested and many are found seriously wanting.
Among all these cataclysmic events, everyone has to make decisions and plan their future on the basis of conflicting information and a plethora of advice that covers from the most scientific to the utter lunacy of conspiracy theories and societal and religious dogma. Like in all crises, the fittest will survive and the weakest will perish and we all want to be among the survivors. Which begs the question as to what determines who are the fittest in business, and more particularly for the purposes of this article, which law firms will survive the crisis and be there when the dust settles and the rebuilding starts.
The legal profession has entered into an unprecedented challenging period where old habits and norms have to be questioned.
In Cyprus the measures of government most likely to affect Cyprus law firms are the partial lockdown of public authorities, restriction of movement, travel bans and the closure of Cyprus courts.
Basic challenges for the legal profession are created by the delays due to the partial lockdown of governmental departments. These vary from the delay in incorporating companies, to the difficulty in obtaining certificates from the Registrar of Companies, as well as obtaining certified and apostilled documents. Simple daily tasks are becoming problematic to perform and can actually delay the closing of transactions, the issue of legal opinions and the provision of basic legal advice and assistance. Moreover, the lack, or limited availability, of digital channels, which could potentially expedite matters, is highlighted.
Furthermore, the traditional model of conducting face to face meetings and discussions (at least on the local level) is challenged. Meetings that were usually necessary for negotiations or the implementation of work-related issues have either been postponed or switched to the virtual level. Therefore, law firms are not only forced to take drastic measures to implement remote working arrangements for their lawyers, but also to facilitate their clients utilising digital means.
In addition, the closure of Courts (apart from the handling of exceptionally urgent cases) and the suspension of the majority of cases have also led to a pause of litigation work for many lawyers. This creates an additional challenge, as apart from all matters that have been suspended the initiation of new court work is near to impossible, as long as courts remain closed. Also, the fact that Court Registrars have also suspended the majority of the work they usually perform has resulted in the interruption of other standard procedures as well, including affidavits. The absence of an e-justice system should be placed in the spotlight once more; if digital channels were available in the court system, the effects of the closure of Courts would have been somewhat mitigated.
The Law Firm and the steps to survival
1. The golden rule of crisis management as we found out in the previous financial crises of 2008 and more recently 2013, with the Banking Crisis in Cyprus, is to accept the new state of factors that cannot be changed and adapt. Back when I was about to join the army my then mentor told me that one measure of intelligence is adaptability. This insight allowed me to stop treating conscription as a hardship and deal with it as a challenge and an opportunity.
In the context of the present crisis the first rule of survival is to truthfully x-ray the law firm and carry out a SWOT analysis of the strengths, weaknesses, opportunities and threats you are faced with. The correct identification of each is the key to mapping out your strategy to survive.
2. Strengthen the team. These are seriously challenging times when each member of the firm will feel insecure and threatened. They will not know what to expect and whether they will still have a job coming out of the crisis or whether they will still be able to have enough earnings to meet their obligations. The worst guide is panic. We must:
a. Remain calm and not rush into decisions on inadequate information. Laying off people and lowering wages in a first knee-jerk reaction will result in a weakened and demoralised team that will not be fighting for the firm when required and will be looking elsewhere when the time allows.
b. Be inclusive. Not all persons in the firm will be on the same page and interaction and transparency are required to make sure all understand the situation and the challenges ahead. If any painful decisions will have to be made later down the road they will be more easily embraced if the process has involved consultation with all stakeholders.
c. Fight for the team so that the team will be ready to fight for us. There is no direct increase of profits by letting our best talent feel unappreciated by a reduction of their wages or a scheme of redundancy that sheds vital resources.
d. Be flexible. We have learned that distance work is possible. Let us incorporate it in our normal operations. It can be more efficient and in the times ahead when social distancing will continue to be required, it will help decongest the workplace.
3. Manage Cash flow. This is an opportunity to ensure that any lax practices of the past remain in the past. A proper cash flow management will allow the firm to survive mounting expenses by prompt collection of invoices and proper case management.
4. Handle Client Expectations. The clients know we are facing challenges. We must own up to them and ensure that the clients are served to the best of the firm’s ability and not cut corners in an effort to be quick when the surrounding circumstances do not allow us to do so.
5. Become more Digital. Investing in technology to allow distant work and putting pressure on the Courts and the government to introduce technology that will bring Cyprus into the 21st century can only result in greater efficiency and lower costs.
6. Invest in new services. A whole range of new types of services and claims will arise as businesses and the economy in general try to overcome the crisis. We must invest in educating our team and thinking creatively how to best serve the new needs of our market and enter the new markets created.
The Cyprus Judicial System
We all know that the system of administration of justice in Cyprus has collapsed. Trials at first instance happen several years after the filing of actions and appeals take such a long time that often their result is irrelevant. If justice delayed is justice denied then the delays are such that we cannot talk about the proper administration of justice in such circumstances. The long-awaited judicial reform is in its final stages but there will be further delays as a result of the present crisis. Litigation of large claims is now a strategic game of vying for an initial advantage in preliminary matters that will allow the party who gains the upper hand to negotiate a good deal rather than wait for a final adjudication.
1. What the crisis has shown is that we have to rush to embrace e-justice. We cannot afford not to have digital filing of Court documents and virtual justice. We cannot continue to talk about physical files that every now and then may be misplaced or about interim applications where a wheelbarrow may need to be used to carry the thousands of pages of affidavits and documents that need to be filed, authenticated and served. It is unthinkable that we need to fix stamps on documents for filing as proof of payment of the required fees at an age when contactless payment is the norm.
2. The present crisis can further benefit us by making it clear that the workload facing the administration of justice cannot be handled solely by the traditional means of dispute resolution. Investing in modernising ADR in Cyprus is a priority. The absence of mediation and arbitration is a contributing factor in the unmanageable workload of the Courts. We must modernise the law and encourage parties to seek resolution of their disputes outside the Court system, with the Courts offering support only where absolutely necessary.
3. We have to complete the judicial reform and bring in the new modern Civil Procedure Rules the soonest possible. These developments will go a long way to help us face the challenges ahead.
We have faced Covid-19 in an exemplary manner so far in Cyprus. Being an island allowed us to face the onslaught later and we have learned from the mistakes of other countries. We have to now face the challenges ahead with the same effectiveness. We must now embrace what in other countries is already the norm in administering justice.
In the challenging times ahead when personal freedoms and personal and commercial well being will be at risk we need to be able to rely on a robust effective system of administration of justice to protect our rights and freedoms.
Partikios Pavlou & Associates LLC | April 2020
Stavros Pavlou, Senior & Managing Partner
Stella Strati, Partner – Corporate, Tax, Private Client