What we do not know about the surreal period we’re in—“Coronatide” is our King of the Hill name for it—would fill the proverbial book, or actually several. (My sources for what I say, for the record, range from The New York Times, Wall Street Journal, and Financial Times to the other usual suspects: Goldman Sachs, McKinsey, Bloomberg, PwC, Harvard Business Review, etc. I won’t presume to speak to medical/scientific issues, desperate as we all are to have some clarity; I’m sticking with the economic/business/strategic issues.)
What we don’t know, or don’t know with any material degree of confidence, are:
- When we can prudently begin to “restart” the parts of the economy that are shut down;
- How to stage/phase it regionally or by metro area;
- How to stage/phase it by industry sector or function;
- Even if it’s all green-lighted from a regulatory and public health perspective, when will people’s confidence to venture forth and be among others in groups return?
- Which sectors will take the longest to recover from the psychological anxiety hangover? Will we be able to simply walk down the sidewalk without tremendous self-consciousness of others’ distance? How “safe?” will a typical office feel? Elementary and secondary schools? Colleges and universities? Churches and synagogues? Retail stores? Bars and restaurants? Theaters, museums, libraries, performing arts? Sports stadiums? Mass transit?
- Will the return of confidence require a vaccine or would an effective (minimally, life-preserving) course of therapy be enough? (There’s some sort of rough precedent for the “therapy” approach, at least: There’s no HIV/AIDS vaccine, but it has morphed from a death sentence to a chronic condition people live with.)
- And…you get the picture.
But that’s not what we’re discussing today.
It’s actually not the case that we know nothing about how or when this will end or what the Post-Coronatide world will look like. Let’s examine a few more or less known known’s.
Real estate and office space
The office is dead, long live the office. The last great barrier to remote Working From Home—the psychological resistance premised on nothing other than, it turns out, habit and lack of imagination as to how it could possibly be different—has now fallen.
We have heard repeatedly that even the most stubborn opponents of remote and virtual working are now converts. Meanwhile, admit it, you’ve discovered a new pastime: Critiquing your colleagues’ chosen Zoom backgrounds: A bookcase? Can we identify any of the books by their spines? Does the stage set include a globe, a chessboard, model trains/trucks/airplanes, sports memorabilia, an astrolabe, family/pet photos, diplomas? Let’s not even get started on wallpapers and upholstery.
Seriously, why did we need those tens of thousands of square feet of Class A space? We didn’t and we don’t. Not all, not entirely by any means, but a surprisingly large proportion of the work we do requires computing power in the appropriate mix of form factors, high-speed broadband, and remind me what the third thing is?
Regular readers know that I’m a dyed-in-the-wool fan of world-class global metropolises and of course first and foremost of my own hometown, New York City. They are under zero existential threat. Human beings are among the most social of all species, and among many of us the yearning for connecting and congregating again is palpable. People have a profound need to connect in person; but we’ve learned it does not need to be five days a week with everyone at the center of our work orbit.
Dense cities obviously have virtues—far more efficient use of resources, assets, and time, and frequent serendipitous physical interactions—but they also have costs, including the requirements of coordination, greater reliance on centralized systems, and congestion. The challenging-to-do but obvious-to-recognize intersection has to combine technology (something like Zoom version 10.0 plus hoteling plus super-secure cloud storage and apps plus “presence awareness” for each individual) with the right public/private incentives to invest in finally, truly, 21st-Century infrastructure.
What a once-a-century opportunity!
For those of you with leases coming due in the next few years, start talking to your architects now. The “other side” office better not be a clone of today’s @ 25% scale; it needs to be designed clean-sheet-of-paper fresh to serve the functions offices will still be used for. My hunch is almost all (a) conference rooms; and (b) shared working spaces of all sizes, modular, flexible, and rapidly reconfigurable.
How you work
A few weeks ago I started seeing an article once a day or so showcasing a company that had done something creative and responsive to the crisis in record time: Everything from Zegna and LVMH reconfiguring the machinery they could to churn out PPE gowns instead of runway-wear to athletic helmet manufacturers pivoting to face masks and diving-helmet like scuba-gear for first line medical workers to Ford and GM and Tesla realizing they could mass-produce ventilators.
Now, instead of seeing one or so article a day along those lines I must see half a dozen or more. Here’s one from this coming week’s Economist, for example (“The pandemic is liberating firms to experiment with radical new ideas”):
But the defining feature of the latest innovation revolution is breakneck speed. Companies are being forced to raise their corporate metabolism and overcome “analysis paralysis”, an affliction caused by top managers having pored over the same irrelevant case studies at business school. In a recent briefing consultants at Bain urged companies to throw out old data, test quickly and often, and assume you will be in testing mode for some time to come.
Elsewhere you see that this crisis has dynamited organizational silo’s, hopefully for good. “Collaboration” is no longer honored in the breach; it is lived, because suddenly people’s mere preferences in terms of their comfort zone, insecurities, and neuroses, fall aside in the face of the imperative to get work done.
What might some of this experimentation look like in Law Land?
Not to be facetious, but “let a thousand flowers bloom.” Welcome suggestions from anyone and everyone. Try anything and everything that passes the laugh test and “test quickly and often.” Just as an example, if your firm’s internal teams are now meeting via Zoom or WebEx or LoopUp or whatever, how much more work would it be to invite the client, or a pricing specialist from your firm, or your head of e-discovery?
Start preparing for what will be hot and what not
Some practice areas will be almost surefire beneficiaries of this on the other side, and others probably will not be.
- Insolvency, restructuring, distressed assets: UP.
- Private equity: UP. According to State Street, in the 20 years since the turn of this century, the equity market has doubled in size, but the private equity market has expanded six-fold. The private equity investors have dry powder and all of a sudden a lot of potential targets have appeared if only because they’re so much cheaper than they were eight weeks ago.
- Regulatory investigations and dispute resolution a/k/a litigation: UP. Busted or canceled deals, contract defaults, unpaid anything and everything, and a vast new frontier in exploring just what all those boilerplate orphans, the force majeure clauses, were actually supposed to mean.
- M&A and, maybe, antitrust: UP. From banking to retail to transport and logistics to the healthcare sector, big looks to benefit from this while small is under tremendous strain. Look for companies seeking scale or greater scale.
- Tech and all the ancillary practices it spawns, including IP: UP. Suddenly tech in almost all its forms is not a toy or a merely nice-to-have, it’s the new operating system of all of our firms and most of our clients. Zoom, the poster child for this, has seen five years’ worth of growth compressed into six weeks.
We will also have some thoughts on one thing that is not going to do well now or into the future, and that’s weak, indecisive leadership.