Riding Out the Storm
Even the Best Disaster Plans Can’t Help New Orleans Lawyers Account for Lost Clients, Disruption and Uncertainty
Posted Feb 21, 2006 5:15 AM CST
By Terry Carter
It was more than two months—nine weeks to be exact—before Patricia A. Garcia returned briefly to her law office in New Orleans’ Lakeview area after fleeing Hurricane Katrina in late August. She lives in a Houston apartment for now, and she came back to fetch whatever might be left of her files and belongings, as well as look for the same in her nearby home.
As expected, there was nothing left at the office. The water had nearly reached the ceiling and stayed for weeks. After it receded the building was gutted by cleanup crews, leaving only the skeletal frame interior of two-by-fours and electrical wiring—and the acrid presence of mold.
Now, on a foggy autumn afternoon, Garcia scans a pile of debris—mostly mashed wallboard and pink clumps of fiberglass insulation—behind the one-story bungalow where she shared space with a title company. A wall plaque from the dentist’s office next door juts from the pile.
“Oh, my diplomas,” Garcia groans with surprise when she spies the plaque. In the mental cataloging and inventory that has played over and over in her mind for a couple of months, she had missed that one. “They’re gone, too.”
College. Law school. Admissions to various courts. A certificate for having been president of the New Orleans Bar Association. And, she says while laughing, her notarial commission, signed by then-Gov. Edwin Edwards, now serving time in a federal prison for taking bribes.
“I can make it till about April,” says Garcia, who is looking after her 81-year-old mother, as she had in New Orleans, and who has had little paying work since the storm. She managed to evacuate with a fireproof box containing all the original documents for wills, trusts and estate planning.
Garcia found a contractor to refurbish her home, and she hopes to move back by April. Her bookkeeper recently turned up a client mailing list, and Garcia sent out letters announcing her temporary location. The problem is, most of her clients are part of the same diaspora.
There were about 8,000 lawyers practicing in the metropolitan area before Katrina. Best guesses had half or more still gone months after. The hope has been that many more would return after the first of the year, when far-flung families might bring their children back to begin a new school semester.
An accurate head count of the lawyers won’t come till later in the year, after the Louisiana State Bar Association begins collecting bar and disciplinary dues totaling $265. Notices go out in May and the deadline is July 1.
For now, the bar has a displaced-lawyers list on its Web site so lawyers and clients can find one another. About 2,000 lawyers registered with new contact information. That also is the estimate of how many Louisiana lawyers won’t return, though some believe the figure to be low.
For the small number of lawyers who rode out the storm and others who came back weeks or months later, from solos to big firms, uncertainty has been the surest companion.
The Gulf Coast of Mississippi and Alabama suffered, too, but the rebuilding there was more certain than for New Orleans—and to be done as soon as practicable. While Katrina and her storm surge blew through those areas and left, high water lingered for weeks in much of the geographical bowl that is New Orleans. On this coast once dotted with floating casinos, the slightly higher ground in Mississippi and Alabama seems a surer bet. Many New Orleans law firms and individuals had emergency plans. Parts of them worked; others didn’t. And most of those plans are being rewritten in light of the disruption and upheaval with a scale and duration that you just wouldn’t plan for, till now.
No one plans for managing partners to strap on sidearms and slip past military checkpoints to get back into the city and haul out files. Nor do they envision a need to act, as the McGlinchey Stafford firm did, by hiring an off-duty SWAT team from another jurisdiction for escort and return with an 18-wheeler and a tour bus carrying 25 lawyers to get their computers and records.
When William Treeby, a partner with Stone Pigman Walther Wittman, went to the firm’s building near the Superdome just six days after the storm, he could hear people scrambling to get out as he entered.
“On the second floor landing we heard a lot of racket above us, obviously someone who shouldn’t be there,” Treeby says. “We got some nearby troops to clear the building. Apparently someone had been living there. We didn’t find any theft, but someone threw a fine upholstered chair from a fourth-story window.”
Hundreds of thousands of people have not returned. Many lost homes or saw them severely damaged, or they simply found something elsewhere that was better or more reassuring.
One huge fear has been that large businesses will give up and relocate to Houston or Atlanta or the next-best bargain. Within three days of the storm, Ruth’s Chris Steak House moved its headquarters from New Orleans to Orlando. Some businesses have trickled back.
Federal rebuilding efforts were much-touted within weeks of Katrina. Then they got stuck in a mucky mix of mistrust and devastation almost incomprehensible in scope and complexity.
“What we need,” says Helena Henderson, New Orleans Bar Association executive director, “is a critical mass. We need enough people back that commerce bubbles up and competition starts to make things happen quickly.”
As far as getting back to business is concerned, everything has depended on something else that depends on something else again: chicken-or-egg logic.
No levee means reluctance to rebuild with insurance money. No homes means no people. No people means no juries or trials—and no workers, which means no taxes and no business. And that means no contracts and the litigation that a percentage of them inevitably spawn.
Not that entrepreneurialism went away with the storm surge. Grass medians on roadways have been thickly jumbled with temporary signs jabbed into the earth. They tout mold remediation, class action suits, help with insurance claims, counseling, and all manner of buying and selling.
There will be years’ worth of such need from this natural disaster. “We had a plan for two or three days,” says Rudy Aguilar, the Baton Rouge-based managing partner of New Orleans’ McGlinchey Stafford. “Nobody ever considered this kind of evacuation and recovery.”
The firm has about 180 lawyers. Before Katrina, 32 of them were in Baton Rouge and 88 in New Orleans. Within days of the storm, the firm scrambled to move 62 lawyers and 83 staff from New Orleans to Baton Rouge. The trek is ordinarily 90 minutes up I-10 but much longer in the post-Katrina commuters’ gridlock. (Others went to various cities to stay with family or friends.)
By the day after the storm, the firm had snatched up 80 apartments in Baton Rouge and rented furnishings for them. An order went out immediately for new computers and for an additional 145 workstations, but the vendor said shipping would take 10 days. Two people were dispatched to Chicago, where they rented a truck, and they brought the computers to Baton Rouge the next day.
The firm has eight offices, six within the region ranging west to Houston and east to Jackson, Miss. For future emergencies, Aguilar says, the firm probably will maintain excess capacity in each location and develop a plan whereby lawyers know which office to head for when evacuating.
Over the past few months, McGlinchey Stafford lawyers and staff have been returning to New Orleans in waves. More than 20 stayed in Baton Rouge until late December because they’d enrolled their children in schools there.
The city of New Orleans’ own desperation was apparent: Three thousand municipal employees were laid off and the usual $1.5 million in daily tourist revenue was almost nonexistent when it decided to demand rent from cleanup and construction workers who pitched tents in a park. The levy on those who came to work at rebuilding a city where there is no other place for them to live is $300 per month. That sounds absurd—except that the city itself has been on life support and needs the $10 a day per person for providing portable toilets, showers and trash pickup.
And the plight of many solo and small-firm lawyers became apparent when the state bar announced on its Web site Oct. 19 that it would give $500 grants to lawyers needing the help to resume their work. Nearly 500 lawyers applied within the one-week deadline, and 471 got grants.
“With so many people applying so quickly for just $500, you know they need help,” says Loretta Larsen, executive director of the state bar. The bar immediately began another cycle of grants, with much of the funding coming from lawyers and bar groups around the country.
Economics have been problematic at the high end of the food chain, too.
“Within three weeks after Katrina, we had eight or 10 million dollars in receivables sitting in a mailbox somewhere,” says Charles P. Adams, managing partner of Adams and Reese, the biggest firm in the region. Most of its 110 New Orleans lawyers had returned to the office in the Central Business District after the first week of November. The firm eventually started getting paid for work done, Adams says, but those earlier earnings would have to be recouped through contacting clients and asking them to cancel old payments and issue new ones.
He says the firm hasn’t had to cut anyone loose—staff or lawyers. Others have. Some have turned contract lawyers loose, and some associates have become contract lawyers. McGlinchey Stafford had to cashier a few contract lawyers, Aguilar says, and of six new lawyers who were to start in September, two were told to call back in January.
Stay Or Go?
“It’s a whole new world for New Orleans,” says Harold Cohen, general counsel of Popeyes Chicken & Biscuits. “It’s going to be years before normalcy.”
Popeyes originated in New Orleans in 1972 and moved its headquarters to Atlanta in 1992. But the chain’s biggest store presence has remained in New Orleans, and two of its major outside law firms are there. The company had 36 stores in the metropolitan area, and nearly a dozen of them were wiped out by Katrina.
“It’s our original hometown and we’re committed to going back,” says Cohen, who went to Tulane University. “But some other companies are taking a much more wait-and-see attitude.” Popeyes contacted one of its New Orleans law firms soon after the storm and gave it a prepaid retainer to work against, rather than pay later for bills submitted. And it told the other, Gordon Arata McCollam Duplantis & Eagan, to forget about normal, more time-consuming arrangements and e-mail bills for immediate cash. “I’m sure they’re all having cash flow problems,” Cohen says.
Gordon Arata managed to get back to business. But it also went back to the drawing board as far as emergency preparedness is concerned.
“Our plan was a great plan that didn’t work,” says Ewell E. “Tim” Eagan Jr., the 52-lawyer firm’s managing partner. “That’s because the whole city remained flooded.” Eagan is referring to the firm’s computer backup system. The backup server was at a remote site in a third-story, climate-controlled room. But it was just a few miles away, and 4 feet of water stood outside the building for weeks.
The firm hired a security team and some other help and returned to the main office building nine days after the storm to get the main servers. The closest they could get was on top of the parking garage, which left another 26 stories to the 40th-floor offices. There was no electricity and thus no elevators.
For about three hours, the group trekked up and down those 26 floors, “carrying servers that weighed 50 to 60 pounds,” says Samuel E. Masur, a partner from the Lafayette office. They also took laptops, backup tapes and accounting records. The firm immediately began looking into off-site backup with a vendor in Oregon.
Many New Orleans firms began considering similar approaches. Adams and Reese also had been backing up with servers located elsewhere in the city. “We’ve obviously learned to get them backed up out of town because access can be affected,” Adams says. “We now have mirrored servers in Birmingham and New Orleans.”
Mirrored servers are what the term indicates: Two computer servers remote from each other are linked and constantly contain the same data and software. If one goes down, the other is the backup.
Adams and Reese had two other technical backups that proved extremely useful at a time when many firms own their telephone and e-mail systems. An e-mail system through a third-party vendor kicked in right after the storm, and intrafirm communications held steady via e-mail. And toll-free 866 numbers provide telephonic backup for members of the management team to call in and report at designated times daily, Adams says. A few miles from the Central Business District, in the Uptown section, solo practitioner Jeff Dye confronted other problems and in different ways. He works out of his home and stayed put during Katrina. Water came up to the edge of his porch and remained for weeks but never made it into the house.
Dye had many reasons for staying, one of the most important of which was the file he had compiled for an upcoming legal malpractice case for a client in Natchez, Miss.
“It’s a very large file, and I did not want to be away from it as we near trial,” Dye says. “I was well-armed, and two weeks into this I had more food and supplies than when Katrina hit. I got them from bartering and giving people rides in my pirogue to go see their homes.” A pirogue is a flat-bottomed canoe often used in the marshlands of the Louisiana bayou, especially for duck hunting.
Dye’s two phone lines never went out, and soon after the storm he got a dial-up modem because the DSL connection was out. He had a gas-powered generator and bartered for another when it gave out. His marketing plan is word-of-mouth and he’s picked up business since Katrina, much of it storm-related. Among other new matters, he’s gotten the legal work for an out-of-state cleanup company with $1.6 million annual revenue, and he represents a group of physicians in their business interruption insurance claim.
Dye is probably more fortunate than most. Many solos and small-firm lawyers have had difficulty even finding their clients. When they have, there hasn’t been much work or money.
“I’ve been hearing from clients who’ve ended up all over the country,” says Michael W. Tifft, an associate at nine-lawyer Halpern, Danner, Martin & Miles in Metairie. “They’re in St. Louis or Houston or wherever, and they want to know about their case. They want to know if it can settle quickly because they need the money.” Months after the storm, Tifft says, there was still difficulty finding or serving opposing parties, or even faxing courtesy copies. “I’ve done hand delivery in mailboxes,” he says.
Business has been disrupted, to say the least. And business interruption insurance has become big business.
Most larger professional firms have such coverage as part of insurance packages. Terms vary, but the policies typically cover payroll and down time, expenses for relocation and to get up and running. Coverage is often for a full year, sometimes two.
The Stone Pigman firm quickly got a six-figure advance from its insurer, with subsequent payments as tallies have come in. Gordon Arata’s Eagan says the firm didn’t need a cash advance but after a few months put together an initial claim in the six figures.
Business interruption insurance is often beyond the reach of solos and small firms. One plaintiffs lawyer from Chalmette, in devastated St. Bernard Parish, is hanging on with the help of just such a policy. Gregory J. Noto had been renting space next to a barbershop, all destroyed by Katrina, and got the insurance years ago after a friend’s law office burned down.
Noto spent a month trying to keep his practice going out of a Baton Rouge motel room, then found an apartment there. His wife has been living in Houston. Their home was destroyed.
“I think I came out OK,” Noto says of his business interruption claims. His first payment arrived in mid-November and he has been submitting monthly statements. “I’ve talked to a lot of lawyers who had no insurance, and I’m thankful I thought to do it.”
Noto took his five biggest files with him when evacuating. He recovered the others and has been trying to dry them out. He couldn’t begin to consider the expensive services for rehabilitating soaked files through a vacuum and freeze-drying process. Even though he has the files, some good cases were washed out in other ways. Some of Noto’s personal injury clients are as far away as Colorado and New Jersey, and not likely to return. That means they haven’t been seeing their New Orleans-area physicians.
“It has a chilling effect on the medical treatment and the value of the case if they can’t see a doctor,” he says. “Their health and the chance of recovery in the case decline.”
Change and the City
The health and recovery of New Orleans itself is at stake. No one expects it to be the same again. Many of those of lesser means who evacuated to parts unknown all over the country are not expected to return. And the return of the middle class remains a question. “New Orleans has a lot of challenges, and we want to be there as a contributor for that effort,” says Adams from the region’s biggest firm. “We’re in it for the long term, and I’d hate to see the professional community eroded. Not to say that there might not be a bad year or two for us in New Orleans.”
And then normal will have a new definition.
“The city is going to be smaller for a while, and different,” says Ernest Svenson, a Gordon Arata partner who is well-known among those who keep up with lawyer Web logs. His Ernie the Attorney blog was one of the earlier ones and has remained prominent.
Svenson, who worked for three weeks in the firm’s Houston office, says there’s been camaraderie among strangers since the storm. Hardship for just about everyone brought with it a sense of being together in the effort to recover.
Once Gordon Arata’s New Orleans office reopened, the firm started bringing lunch in for lawyers, staff or whomever, including delivery people who arrived at the right time. Those quickly became sessions for telling personal stories about the aftermath of Katrina. “But people have been upbeat and see for the first time that the city has an opportunity to fix endemic problems that it never was going to fix,” Svenson says. “I’ve always liked change, and when you face it you’re forced to ask yourself what’s really essential. We have a rallying point that just wasn’t there before Katrina.”
THE ABA RESPONDS
After Hurricane Katrina struck, the ABA mobilized quickly to offer its expertise to victims of the storm. Volunteers staffed emergency hotlines for those needing legal assistance and helped coordinate lawyers offering pro bono services. Association entities examined problems encountered by children in the welfare system, displaced residents and criminal defendants.
KATRINA'S TECH LESSON:
Don’t Wait, Think Outside the Office
Frank Neuner, president of the Louisiana State Bar Association, says the reason some law practices hit by hurricanes will survive while others lost all their documents often came down to a last-second decision as someone was walking out the door.
One solo practitioner Neuner knows in St. Bernard Parish had the presence of mind to grab the hard drive out of his computer. He lost all his papers in the flood after Hurricane Katrina, but his practice will survive. Meanwhile, Neuner says, another lawyer left his laptop at home, losing it and all his documents along with his house.
Hurricanes may have lawyers thinking about disaster recovery, but electronic documents are susceptible to a lot more common and unnatural disasters than acts of God. Computer viruses and crashes can destroy years of work as completely as any flood.
The lesson lawyers should take from Katrina is that disaster recovery and computer backup shouldn’t be left to chance.
Backing up data on computers away from a law practice’s office is probably the best technique for protecting a practice against catastrophic events. “I think the key for people to get up and running quickly is to have off-site backup and access to servers,” Neuner says.
It sounds like a simple idea, but it is still technically difficult and opens a law practice up to a number of other problems that could be as catastrophic as a fire. For one thing, many lawyers just don’t like the idea of putting their confidential information into someone else’s hands.
“Lawyers are traditionally leery of off-site backup—and for good reason,” says Jim Calloway, director of the Oklahoma Bar Association’s management assistance program. “First, their data is transmitted across insecure Internet and then put in the hands of a third party that has no right to see it.”
Law firms concerned about security can use encryption, which scrambles messages so that they cannot be read while being transmitted. Unfortunately, there are no standards for the types of encryption or transmission methods for securely backing up data online. Law firms will have to decide how much they want to invest in securing their backup systems if they plan to transmit data over the Net to a third party.
All work documents should be backed up regularly, most likely daily. Firms should assess which applications and documents are most important and back them up in a standardized way.
Tape backup is the preferred medium for large law firms because it can store huge volumes of data relatively inexpensively. However, large tape-backup systems are very expensive both to buy and maintain. Smaller firms can employ compact discs, DVDs or removable hard drives for their backup needs.
These backup media should be transmitted or physically taken off-site daily. For small or solo firms, that may mean that one person burns a backup disc and takes it home. External units like Zip drives and disks or backup systems that plug into a computer USB port are good options for solos or small firms with a couple of individual computers.
Know Your Weaknesses
Once a backup strategy is in place, information technology specialists say the next thing to do is to run periodic “fire drills.” Backup tapes in particular have proven dangerously unreliable when firms try to restore systems or produce old e-mail messages during litigation. It’s probably too expensive for firms to have redundant e-mail and document management systems, so at a minimum it is helpful to have a backup copy of an application and backed-up documents so that the IT department can rebuild a system if it crashes.
Neuner says one thing he’s learned is that it is helpful to have a checklist of important items, especially insurance policies, a list of which computers to back up or remove to a safe place, and a list of which people know where things are stored. It is important to know alternate phone numbers and e-mail addresses for reaching people.
In Louisiana and Mississippi months after the storms, many landlines had not been fixed and cell phone coverage was spotty, so personal digital assistants and text messaging were increasingly important.
Backing up computer systems is a tedious and unglamorous part of practicing the law, but if a firm fails to prepare for the worst, the staff will be left wishing they had done things differently. “A lot of lawyers out there are probably wishing they’d unplugged their server and thrown it in the car,” Calloway says. —Jason Krause
In "Riding Out the Storm," February 2006, page 32, Charles P. Adams said his New Orleans firm did not eliminate any lawyer or staff positions. However, while Adams and Reese continued to pay all employees for two weeks after the storm hit, jobs were not held for staff who could not relocate to Baton Rouge, La., by Sept. 23. Those unable to meet the deadline were invited to reapply for their jobs when they were able to relocate. Several did so and are back at work at the firm.