In the Spring of 2007 the former financial trader, mathematician and philosopher Professor Nassim Nicholas Taleb, published his seminal book ‘The Black Swan : The Impact of the Highly Improbable’. The book is widely credited with predicting the financial crisis which emerged in the subsequent year and lots of conference speakers, including me (Paul) have since taken tales from within the book to demonstrate the lessons of unpredictability for businesses.
These are perhaps the most unpredictable times in living memory, and we are living in an era when predictions may give people an artificial high or low if followed too closely.
Varying the messengers
The Downing Street news conference each day is sharing information but by varying the speakers and their specialisms the government is successfully ensuring the narrative is not controlled by media looking for a particular negative or positive angle, given that in these times of the highly improbable to do so could create a false narrative. We suspect some of the lessons of Professor Taleb’s book have been absorbed, if not all of them, by those advising the UK government and ministers.
Lessons for law firms
There are however lessons that we as law firm leaders can utilise for the benefit of our businesses over the coming days, weeks and months. By now those leading law firms should have ensured that people can work from home effectively and they should be evolving their revised working arrangements to ensure that they:
- focus on cash collection to protect the financial position of the firm;
- continue to serve clients where practicable;
- realise work in progress (WIP) by billing clients;
- work on files that have been slow moving or have stalled, by focussing on any matters that need time and energy; and
- liaise with their clients to ensure that they have the support that they require over the coming days and weeks.
There are three other things that you might like to think through and concentrate on in the coming days, and share amongst your team, in order to help focus on the matters that will make a real difference to how your business firstly weathers the current events and secondly emerges stronger when Covid-19 passes. And it will pass.
What is a Black Swan?
The Covid-19 pandemic is a true “Black Swan” event. In the late 17th century the philosopher Karl Popper observed as follows:
“No number of sightings of white swans can prove the theory that all swans are white. The sighting of just one black swan may disprove.”
As the Dutch explored Australia in late 17th Century they encountered for the first time a colony of black swans. Until then all swans had been white, but the falsity was demonstrated. Whilst a philosophical concept, this does help us because lots of people are predicting what is going to happen over the next days, weeks and months. None of them can do so with any certainty. One of the lessons of Professor Taleb’s book is that nobody can predict the future.
Our suggestion to law firm leaders is therefore do not waste your time, your energy or your focus trying to predict what will happen next. Instead focus on the practical things that you can influence. The trends that will start to emerge as this passes and things develop will become obvious and therefore rather than trying to anticipate them or predict them, law firm leaders should instead focus on the practical. We listed some of those core tasks above and we have covered them in other blogs, and we will return to some of the themes over the coming days.
We are entering, and are probably already in, a shut down recession. Britain and its trading partners on a worldwide basis have closed the door to much commercial activity. Think of the measures introduced by the government and by the Bank of England and mirrored by central banks across the world as being a bridge connecting the moment of shutdown to the moment of reopening. Until then, there is a need to focus on only the work that can be completed in the shutdown period and only once governments start to reopen will you and your teams want to walk across that bridge.
Prediction is a fool’s errand
We noted earlier in the blog that there were three distinguishing features that firms should focus on. The other thing that makes this particular Covid-19 crisis different to previous social, economic and health events is that it is a genuine Black Swan moment. It was not merely highly improbably in terms of a likely world economic shut down, but it was entirely unexpected. Nobody was predicting it; nobody was expecting it and it is more like something out of science or dystopian fiction than reality. This tells us that whilst it was unexpected so will the ramifications be.
Already the media and internet is littered with blogs predicting a more agile working environment in the future, a different society when this passes etc. Ignore all the noise, concentrate on cash collection to protect your business, give great service to clients, support the clients that need your support in this period and the things that you can predict and control, i.e. the internal factors, and ignore the noise from outside.
It is always worth remembering that there can be good Black Swans as well as bad ones. There will be something in the coming days, weeks and months which is a good Black Swan and helps kick start your bounce, your recovery, or the bounce and recovery of the market generally. So focus on the things that you can influence until that arrives.
If you are feeling overwhelmed, stressed and unsure where to start, then over recent days we have made a number of useful blogs that you may find helpful. These include:
- Crisis Management for Law Firms
- Covid-19 working from home – a guide for law firms and solicitors
- Covid-19 and employment law
- Covid-19 and our role in supporting the legal profession
The Law Society of England and Wales has naturally made available a huge range of supporting materials, some of which we have contributed to including the Podcast referred to in the supporting the legal profession blog. We will continue to make resources available that summarise potentially helpful points to our clients and potential clients.
We are here to help you
Do not forget we are a law firm who advises other law firms, we are here to help and support you, we can shoulder some of the strain with you because we focus on solutions and we know how multiple law firms are reacting so we can share with our clients the solutions that are emerging.
We cannot predict the future either. We can however help to ensure that you feel able to get there.
Finally, do remember Black Swans typically fly off so having spotted one doesn’t mean you will always be seeing one.