On Thursday, August 22, the NASDAQ, one of the largest financial exchanges in the world, failed. It had no backup, and was down for more than three hours. The financial impact had to be in the billions of dollars.
Even as big as NASDAQ is, even though they have a pivotal role in the global economy, they failed to have a plan for disaster recovery. How and why they recovered is still, at this writing, a mystery. The fact that they did recover is remarkable. Even more remarkable is the fact that it has happened to them before. According to an article in The New York Times, the exchange has been shut down twice before when squirrels chewed through power lines, and as recently as 2011 hackers breached its computer system.
If it happened to NASDAQ, it can happen to your law firm. As I’ve written many times before, “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. NASDAQ was out of commission for three hours. A burst water pipe, a fire, a natural disaster, a computer meltdown could put a law firm out of commission for three weeks, or three months.
NASDAQ had no backup. How about your firm? The issue isn’t just backing up data files, although that is important. Do you have disaster recovery backups like these?
·An internal emergency communication system for lawyers, staff, clients, vendors, and the court, incorporating recorded hotline messages and out of area contact points.
·A plan for temporary office space that will accommodate furnishings, computers and phones.
·A referral arrangement with another firm that will allow you to carry on key practice matters by requesting a continuance or rescheduling a deposition.
·A solid relationship with your banker so you can get an emergency loan.
·An employee assistance fund to help tide staff over in the event there are no ready funds to pay them.
If you don’t, start planning to put them in place now. If disaster happened to NASDAQ, it can happen to you.
What happens to your firm when you need to retire, or during unplanned circumstances such as death? In today’s clip, Ed discusses the importance of succession planning, and gives some helpful tips to get you started.
I’ve written extensively about lawyers planning for the succession of their practice, whether by merger, sale, or simply retiring by just walking away one day, closing their door forever more.
Some failed to plan well or spent their working lives increasing their standard of living to meet their compensation level — and not saving; others suffered financial losses in the economic downturn; and still others have lived beyond what they expected with their savings depleted by normal bills or chronic illness.
But, what are the numbers? I haven’t seen hard and fast numbers for the legal profession … but here are some numbers for our country … which I believe shed some light on the legal community.
The unemployment rate for Americans older than 75 years is twice what it was only five years ago. The rate might be higher if older folks were not embarrassed to say they are looking for work.There has been a 25% jump in the number of older people in the work force in the last 5 years. By 2018, the government projects that 10% of people over 75 years of age will be working or seeking work. Average net worth of households with at least one person over 70 years of age went down by 27% between 2007 and 2009. In 1981, social security paid 52% of the average worker’s pre-retirement earnings; in 2001, the percentage was 39% and expected to decline further.
More elderly find they cannot afford to retire … they must continue to work. The recent economic woes have taken a big bite out of the retirement hopes and plans of the Baby Boomers. And this includes lawyers.
Just today, a lawyer in his late 60’s called me to talk about selling his practice and retiring. But, he said, he enjoys what he does and financially cannot see his way to retiring. For interesting tax reasons, he turned away from selling his practice. Of course, he didn’t consult me before he made this decision.
But, I find it interesting that the prediction made by the ABA only a few years ago that by 2020 (or perhaps sooner), 400,000 lawyers would retire. As evidenced by the phone conversation today, I believe the numbers are correct, but the timing is not. Succession planning, whether a solo or large firm practitioner, will require more thought than we anticipated. And experts should be consulted to determine sales potential, tax planning (both estate and consequences of a sale) and future personal life planning.