“Black Swan” Events: Preparing Your Law Firm Not to Be Broadsided

Centuries ago, people widely believed that all swans were white, that there was no such thing as a black swan. The reason, of course, was that no one in the civilized world had ever seen one. Eventually, the discovery of black swans in newly-explored Australia upended that belief, and we soon wondered why we had ever assumed black swans couldn’t exist.

Today, we use the term black swan events to describe monumental occurrences that seem unprecedented at the time, but in hindsight appear inevitable. These events are the bane of businesses, law firms included, and can kill a business without proper foresight and preparation.

To illustrate: Suppose one day you get a call from your banker informing you of some suspicious purchases on your company debit card. You check your balance, and the money has been drained from the account. Upon further investigation, you find multiple instances of fraud and identity theft. Your law firm’s cash flow comes to a screeching halt. Before the event, you had no concept that this crisis could ever happen to you. However, when you understand that identity theft is at an all-time high and you read about the Equifax data breach that affected as many as 143 million people, you realize it was only a matter of time before identity theft came knocking on your door.

Ways to Be Prepared

Surviving black swan events boils down to proactivity and preparedness. Let’s look at some common-sense tips to get you there:

  • Presume nothing. Act as though Murphy’s Law is true: Anything bad that can happen, will happen. Try to imagine anything that could go wrong with your current business structure, from tax audits to natural disasters. How would you address these events?
  • Set up emergency plans. Modify these plans as needed as you perceive new possible threats.
  • Set aside emergency cash. Since business centers around money, many black swan events can be resolved by having some. Apportion a generous stash of funds for unforeseen emergencies, and add to it as you can.
  • Develop peripheral vision (metaphorically). Sometimes you can detect subtle signs of a coming crisis—and get ahead of it—just by being mindful and aware.

We can never anticipate every possible crisis, even those that, in hindsight, seem obvious. Nor do we need to develop a “boogie-man” mentality where we become paranoid of every possible bad scenario. However, a little basic preparedness goes a long way toward surviving black swan events. Prepare for the worst—then expect the best.

Building Better Business Systems For Law Firm Owners