Lawyers Calling It Quits Due To Coronavirus
Lawyers closing their offices seem to be common during the pandemic. How many of them are going to re-open?
On March 17th, 2020 business owners were thrown into a new, scary world headfirst. Prior to the Coronavirus, most businesses were most concerned about getting positive Google reviews. A month later and they are now trying to avoid bankruptcy and lawsuits.
Law firm owners have been forced to take their business plans, financial projections, and business opportunities and shred them. The COVID-19 crisis has shut everything down and made consumers hold on to their cash. When people don’t know if they can afford their mortgage, they don’t spend on anything but groceries.
On April 8, 2020, Justin Trudeau released a statement about Canada Emergency Wage Subsidy.
Trudeau said that:
“If businesses use March to compare revenue, they’ll only need to show a 15% drop because many only felt the impacts of COVID-19 halfway through the month. And as for charities and non-profits, they can either include or exclude government funding in their revenues.”
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Many Law Firms Are Closing | Lawyers Closing Offices
A Canadian Federation of Independent Business survey of 8,730 companies found that 50% of Canada’s small businesses have already seen a drop in sales due to the economic effects of the virus of COVID-19.
Many other businesses have drastically cut their employee’s work hours. For example, the grocery store near my house used to be open 24 hours. Now it’s open 12 hours a day.
The survey was done in March 2020, so I have no doubt that it is much worse now. 20% of these businesses laid off their employees. Businesses either had to decide to close their doors early on or close their doors when the government told them to.
Many law firms will have a worse time the longer the lockdown goes on for. Many businesses such as restaurants in tourist areas lose money during the fall and winter. It’s during the spring and summer that they earn large revenues. The spring started on March 19 this year. It’s unlikely that many businesses will be able to re-open before the end of spring on June 20, 2020.
Winter 2021- Lawyers Closing Offices
With all this lost revenue, many of these businesses will not be able to survive during the fall of 2020 and the winter of 2021. Bankruptcy is around the corner.
To make things worst, instead of being able to work hard to recover their revenues once they re-open, the business owners might face lawsuits with laid-off employees, suppliers which they broke a contract with, and landlords they couldn’t pay.
A $40,000 loan from the government is not going to be enough. It won’t even be close. Every month that the lockdown continues, many businesses will have losses of over $50,000. Even if the business manages to stay afloat, they are not going to be able to repay that loan to the government.
So instead of going bankrupt in the next few months, the businesses will use the loan to go bankrupt several months later. If businesses go bankrupt, the government loses its largest taxpayers and its loan. This can lead to the federal government of Canada starting to default on their obligations.
Some lawyers might be pushed to break the rules and get in trouble as a lawyer.
Entrepreneurs Can Be Successful Despite The Economy
The best entrepreneurs can be successful regardless of the economy. When something happens, good or bad, they plan and then react. They don’t let the fear sink in, they push forward. They put in the hours to learn about what resources are available, and then they go after them.
Many business owners will not benefit from EI or the new CERB program. I am hoping there is something solid put in place for business owners. I’m hoping that the federal government will know that it will be up to entrepreneurs to rebuild the economy.
They say entrepreneurship is a rollercoaster. If that’s the case, I’m looking forward to being pulled up towards the launch pad.
Written by: Alistair Vigier