DISASTER PLANNING:  WHY AND HOW

by Barbara Jerchower ^{Click here} and Kenneth A. Bailey ^{Click here}

This article was conceived and requested by ALA in August of 2001. The authors met for the first time on the evening of Monday, September 10, 2001, when America was at peace. We hopefully will never experience again what occurred on September 11, 2001, but it did weigh heavily on our hearts and minds in the ensuing days and weeks, as we completed this article.

Introduction

Disaster preparation could be called “preparing for the worst, hoping for the best.” It is certain that the worst will occur if preparations are not made for many disasters that threaten our personal and professional lives. It is unthinkable to go without adequate homeowner’s or car insurance, and we instinctively stock up on basic groceries when a storm is imminent. As administrators, we must prepare our firms and take the same precautions as in our personal lives.

On average, a fire occurs in a U.S. business about every 20 minutes. ^[1] Even minor disasters such as power and telephone outages and network breakdowns can have serious consequences and result in a loss of customers. According to the Association of Records Managers and Administrators (ARMA), two of every five businesses that experience a disaster will not recover; one of those will fail within five years. ^[2]

What is a disaster?

A disaster may be defined as any unplanned, disruptive event that requires the immediate deployment of limited resources. Disasters are classified as being caused by forces that are: 

Ø  Natural;

Ø  Technical;

Ø  Social; or

Ø  Health-related.

Natural disasters include hurricanes, tornadoes, earthquakes, floods, electrical storms, fires and blizzards. Technical disasters involve a mechanical failure of some kind: a sprinkler or alarm system malfunction; a computer network crash or a telephone system failure. Social crises could involve arson, bombing and/or criminal activity. Health-related disasters include epidemics, pollution, medical emergencies or death.

The primary focus of any emergency planning must be the safety and well-being of all firm employees. The emotional consequences of any disaster can be as varied and devastating as any physical injuries, and can render employees incapable of functioning normally.

The secondary focus of disaster preparation is the physical assets of the firm, which include the premises, furniture and furnishings, equipment, client files and firm records.

The Process of Developing a Disaster Recovery Plan

Step I: Risk Assessment

Each administrator must conduct a risk assessment for his or her individual firm. The geographic location of the firm and its branch offices will have the greatest impact on assessing natural disasters. West Coast firms are concerned with earthquakes and southeast firms need to anticipate hurricanes. Firms located in more rural areas are less concerned with terrorism. However, every firm must be concerned with technical disasters and the potential for medical emergencies.

As a starting point, list every possible disaster that might occur and make an honest evaluation of all areas in which your firm might be vulnerable. It is only by identifying all possible threats that a meaningful plan can be prepared. Each firm should prepare for the worst, no matter how improbable the threat may seem.

Step 2: Develop a Disaster Planning Team

The size of a firm and number of its offices will determine the makeup of the disaster planning team. In smaller firms, with only one location, the team may consist of the administrator, the managing partner and one or two other key staff members. In larger firms, there should be representatives from the executive committee and various department heads; such as human resources, facilities, finance, records management, library services and technology. Each member of this team will have responsibilities, including: 

Ø  Developing the Disaster Plan;

Ø  Implementing the training and testing associated with the plan; and

Ø  Directing recovery and restoration efforts when a disaster has occurred.

Team members will have valuable input on how to restore operations as quickly and efficiently as possible in their particular areas of expertise. Therefore, choose people for the disaster planning team who have: 

Ø  Longevity and familiarity with the firm;

Ø  A high level of responsibility;

Ø  Emotional maturity; and

Ø  A calm and reliable demeanor.

Members of the disaster planning team should have responsibility for formulating an evacuation plan. The plan should provide for the creation of an evacuation safety team. The plan will depend on the size of the office and the number of floors it occupies. The evacuation team should assign at least two safety monitors on each floor to supervise quick and safe evacuation as well as a safety warden to coordinate the monitors. Wardens and monitors should be adequately trained and properly equipped with essential items such as flash lights, whistles and walkie-talkies.                                                                

Step 3: The Plan

The disaster preparedness plan must be a written document. It should be bound in a fashion that allows for easy revision since the plan should be reviewed, revised and updated at least once a year. All team members should participate in the construction of the plan. It is wise to solicit advice and input from a wide range of individuals, both employees of the firm and vendors, who can offer specific and helpful expertise. A knowledgeable insurance broker can be an invaluable asset in developing a plan and assisting in times of trouble and recovery. A network integrator is the most logical advisor on technical issues. The plan is a living, breathing document that must be tested and revisited often to be effective.

Protect the Asset:  The People

The employees of a law firm are its most valuable asset. The emotional well-being and physical safety of the firm’s employees should be its most pressing concern.

Medical Preparedness

People have accidents and become ill in the workplace under normal circumstances. It is necessary that key personnel be trained in first aid and CPR. The local chapter of the American Red Cross and most fire protection departments/districts will give instruction in any workplace. The exercise is a small investment in time and money with immeasurable benefits. Employees generally welcome the break in routine, and both appreciate and enjoy the classes. The ability to assist a fellow employee or stricken client is invaluable. Many buildings now maintain a defibrillator on the premises. Contact the building owner or management company to determine if your building is so equipped. If not, larger firms may consider purchasing the equipment for the benefit of its staff and clients.

An employee assistance plan (EAP) is a valuable benefit for employees and can be utilized for post-traumatic issues resulting from any type of disaster. The law firm administrator should meet with representatives of the EAP when drafting a disaster plan so that everyone is aware, beforehand, of what services will be forthcoming from such a service if the need arises.^[3]

Orderly Evacuation

Evacuation procedures will depend on the physical plant in which the firm is located. Obviously, a firm housed in an elevator building will have a different evacuation procedure than one in a single story facility. Elevators should never be used when the emergency is a fire. All firm employees should be aware of which stairwells are to be used in case of fire and familiar with an orderly and safe method of evacuation. Employees should walk up or down stairs in single file, keeping to the right so that emergency and fire personnel may travel on the left.

If earthquakes are a threat in your locale, employees should be instructed on the safety of remaining inside the building and seeking cover under furniture against a solid inside wall. They should be instructed to stay away from glass walls, doors, windows, and freestanding furniture and partitions.

Should a total evacuation become necessary, a meeting place should be designated beforehand and communicated to all employees. This location should be a short and safe distance from the current facility.  Should it become impossible to continue operations at the current facility, an alternate and convenient “command site” should be chosen. This should be a location that has, at the very least, telephones and Internet access. 

Communication

The fast and accurate exchange of information during any type of disaster or emergency is imperative. Employees and firm clients must be kept apprised of office openings and closings and the whereabouts of essential personnel. Each member of the disaster planning team should carry a list of emergency telephone numbers. This list should include access numbers for: 

Ø  Police;

Ø  Fire department;

Ø  Utility companies;

Ø  Insurance broker;

Ø  Key equipment and supply vendors;

Ø  Local hospital;

Ø  Local radio station; and

Ø  Other disaster planning team members.

The list should be prepared in such a way that it can easily be stored in a wallet or billfold, and should be periodically reviewed and updated. A communication plan should be drafted to notify employees of office closings and when to return to work. Each new employee should complete a form for the human resources department with current home address, telephone number and personal contact in case of emergency. This list should be circulated among all members of the disaster planning team and stored in multiple locations off site. It should be reviewed frequently and updated. A communication tree should be established where one key person calls five people, who calls five people, and so on. This is helpful for office closings or any other emergencies.

The firm can also use its Web site to disseminate and collect information. Someone on the disaster planning team should be able to update the Web site and produce revolving banners with updated information.

One member of the disaster planning team should be charged with the responsibility for issuing press releases and responding to public inquiries to avoid the release of conflicting and confusing information.

Protect the Asset:  The Physical Plant

The Current Facility

It is imperative that all exits from the floor (or building) be clearly marked and illuminated. All fire extinguishers must be periodically inspected and fully functional. Key personnel should be instructed on how to discharge extinguishers. The staff of the law firm should be instructed on proper procedures to evacuate the building. Periodic fire drills should be conducted to reinforce initial instruction.

Floor plan diagrams should be posted for guests in conference rooms and lavatories, similar to those used in hotels. Common sense dictates that flashlights with fresh batteries be located in convenient and posted locations around the office.

Alternate Facilities

The firm should consider establishing either or both a cold and hot site in which to continue operations. A cold site is a location, possibly leased empty space, in which the firm may set up operations on short notice to continue business. A “hot site” is a location outfitted with the same computer hardware, software and facilities as the firm and is in a stand by mode. Back-up tapes can be installed and business operations commenced almost immediately.  There are huge cost differences between a hot and cold site, which must be taken into consideration when the disaster plan is formulated.

In addition to a hot or cold site, it is advisable to have reciprocal arrangements with other firms or businesses in case portions of your facilities are not usable. This might mean lending each other use of conference rooms, libraries, and copy machines for the short term.   

Protect the Assets:  Technology

Computer Hardware and Software

The lifeblood of every law firm flows through its computer system. The authors cannot stress strongly enough how crucial it is to back up the entire network every day, every week, every month and at each year-end. Back-up tapes should be stored off premises and all the disks and CD roms for each software application should be stored in fireproof cabinets or off site. ^[4]

Telephone System

Make advance arrangements with the local telephone service provider to have incoming calls rerouted to another location in case of a disaster. Have an answering machine available at that location to provide callers with other numbers or vital information regarding the opening and closing of the office.

If the telephone switch at the office becomes inoperable because of a power or mechanical failure, have an analog telephone available to plug into fax lines that bypass the switch. Many employees also have cell phones that are helpful in this situation.

Protect the Assets:  Property

Client Contact List

A firm’s asset of incalculable value is its client base. It is imperative that the firm has the ability to assure clients of its viability during a disaster. Clients need to know that their court dates will not be missed and that their business is being attended.

A current and correct contact list, both hard copy and electronic, for all clients, which includes names, addresses and telephone numbers (business, home and cell), should be stored with back-up tapes.

Art Work and Collectibles

If your firm has valuable artwork, antiques, and collectibles, these items should be:  (1) photographed and/or videotaped, and (2) appraised. Most of these items should be scheduled on a separate rider of the property insurance policy. ^{Click here}  It is much easier to prepare and substantiate an insurance claim with current appraisals and photographic proof in hand. Further, it is very difficult to prepare accurate lists of lost possessions from memory. A documented inventory of firm possessions will facilitate the processing of insurance claims and ensure the likelihood of maximum compensation.

Insurance

Part of every business and disaster preparedness plan must include a complete review of insurance policies. A competent and trusted insurance broker should be part of this process. The firm's insurance coverage should include the following: 

q   Real and personal property;

q   Loss of earnings and extra expense;

q   Key man life insurance;

q   General liability;

q   Business interruption coverage; ^[5]

q   Replacement of valuable papers;

q   Riders for valuables and collectibles; and

q   Flood and earthquake insurance (if applicable).

This process should include an examination and determination of: 

ü  How much revenue would be lost in the event of the death of one or more key people;

ü  How much business will be lost if the firm is closed for one day; and

ü  How much will it cost to replace files and wills, minute books and stock certificates?

Testing

Testing the firm’s emergency evacuation plan is critical. It is stressed that all testing be done periodically and frequently to establish a routine with long-term employees and to acquaint new and temporary employees with the firm's disaster plan: 

q   Evacuation drills must be conducted, without warning, semi-annually, utilizing the supervision of the safety monitors and warden. This prepares employees for a safe and speedy exit in the event of a real disaster;

q   Check the condition of all safety equipment; including flashlights, whistles, and two-way radios;

q   If not already mandated by local building codes, alarms and extinguishers should be periodically tested;

q   First Aid and CPR training and certification must be reviewed and updated annually; and

q   Periodically test equipment and tapes that are stored at the hot site.

Recovery

The disaster planning team needs to redirect its efforts to the recovery process, once the disaster has occurred. A thorough evaluation of damage to people and the facility should be conducted. The nature and magnitude of the evaluation will be determined by the type of disaster sustained.

Damage to Firm Assets:  The People

The member of the Disaster Planning Team charged with employee communications must contact all employees to ascertain their ability and readiness to return to work. An assessment should be made of:  (1) personnel who are available and willing to return to work, and (2) what the firm's workload and operational needs will be in the short-term.

If there have been casualties because of the disaster, grief counseling for employees and survivors or employees may be appropriate. An EAP can be helpful with this endeavor. Assistance should be provided to employees with insurance issues and medical claims.

Damage to Firm Assets:  The Facility

Appropriate members of the disaster planning team already should have assignments relating to the recovery process for the firm's facility. These responsibilities include: 

1.         Securing all damaged areas with the use of security guards or other protective measures;

2.         Contacting building owner, management company, building maintenance to notify of damage;

3.         Contacting the fire, police & health departments to assess damage and habitability of facility;

4.         Contacting and verifying service from the electric/power company, water department, local and long distance telephone companies, post office, computer vendor and other vital service providers;

5.         Drafting press release and contacting appropriate media outlets with pertinent information;

6.         Communicating with clients and third parties to assure them that court dates and deadlines will be met. Keep clients informed about dates for reopening the office and when business will resume as usual;

7.         File and calendar reconstruction. If files were damaged or destroyed, reconstruction could be a monumental task. Only those documents produced in-house can be replaced from back-up tapes. Other documents will have to be retrieved from court offices and other law firms. It may be necessary to hire a team of temporary employees or an outside service to aid in this process;

8.         Reconstruction of firm business records and financial data, if necessary. If cancelled checks or bank statements were lost, these can be retrieved from the firm's banks. Financial reports should be available from the firm's back-up;

9.         Assessing damage and coordinating with insurance carrier. Inspections by the insurance adjusters should be arranged as soon as the facility is deemed safe. When a determination has been made about how much business has been lost, how many files need to be reconstructed and the extent of the physical damage sustained, claims should be filed with the insurance company; and

10.         Meet with firm’s banker to discuss interim cash needs. The firm may need to activate its line of credit to sustain itself when cash flow has been interrupted. The firm must continue to meet its obligations to its employees, the government and vendors.

Conclusion

When the disaster has passed and recovery completed, review the existing disaster preparedness plan. It will become readily apparent what errors and omissions were made. This is the opportune time review the plan and correct what did not work. This is an instance when we can learn from our mistakes.

Appendix

Documenting Damage and Losses for Insurance Claims

1.         Don't alter the condition of any damaged property until it is inspected by an insurance adjuster. You should, however, make necessary emergency repairs to prevent further damage.

2.         Take pictures of all damage, including your firm's exterior, interior, parking area.

3.         Document all items and property that were damaged or destroyed. Note the cost, brand, model and date of purchase. Include any available receipts and pictures of the items.

4.         Contact your insurance company as soon as you have all information related to your situation.

5.         Ask a contractor to estimate the costs of repairs. Provide this information to your insurance adjuster.

6.         Record all expenses you incur as a result of property damage, including the cost of temporary repairs, hotel accommodations and meal expenses.

 

This information provided by the Society of Chartered Property and Casualty Underwriters: 

Disaster Planning Questionnaire

(A set of questions to help administrators establish a disaster preparation plan, or decide if the firm needs a more extensive plan, is included in the full ALA Management Encyclopedia^SM article.)

Business Recovery Plan

Please review the attached business recover plan provided by Sandra Day of Patterson Belknap Webb & Tyler in New York. The 45-page Business Recovery Plan is included in the full ALA Management Encyclopedia^SM article.

ALA Disaster Planning and Recovery Resources

Please review these files and links for additional information on the subject at ALA Web site. ^{Click here}

Bibliography

Barr, Jean. “Putting Together A Disaster Recovery Plan.” IL:  ALA. Legal Management. January/February 1993.^[6]

Bell, Judy Kay. Disaster Survival Planning. CA:  Disaster Survival Planning Inc. 1991.

Brunetto, Guy and Norman L. Harris. “Disaster Recovery:  How Will Your Company Survive?” Strategic Finance. March 2001.

Cullen, Scott. “What If? Do you know where to turn in times of crisis in your workplace?” Office Solutions. February 2001.

Guerra, Phil. “Plan Ahead and Survive When Disaster Strikes.” IL:  ALA. Legal Management. November/December 1998.^[7]

Reidy, Andrew M., Robert Carter and Jodi T. Tuer. “Business Interruption Coverage: Issues to Consider When Disaster Strikes.” NY:  Law Journal Newsletters. Accounting for Law Firms. October 2001.

Schachner Chanen, Jill. “Just When You Think It's Safe...” IL:  ABA. ABA Journal. March 2001.

Task Force on Law Office Disaster Planning. The Lawyers' Club of San Francisco. “When Disaster Strikes:  How to Handle Law Office Emergencies.” IL:  ABA. Section of Economics of Law Practice. 1988.

Toutant, Charles. “How Law Firms Can Stay in Business, Even in Worse-Case Scenarios.” NY:  Accounting for Law Firms. October 2001.