Not too many law firms have come through the economic crisis brought about by COVID 19 looking good. In April 2020, Kenya ordered the closure of courtrooms to the general public, this was in line with government regulations to limit gatherings and alleviate the spread of the virus. Chief Justice emeritus David Maraga pointed out that the majority of judicial officers are elderly and more vulnerable to the virus. With judicial services scaled down, first consideration was given to cases the courts considered to be urgent. Those who could not substantiate urgency couldn’t access the court system. Rolling curfews imposed to prevent the spread of COVID-19 also hampered access to justice.
Unable to meet their financial obligations, and faced with a country-wide slow down in the economy, countless law firms were unable to cope; they either had to down-size by laying off staff or close- shop entirely. We sat down with James Oketch, founder and managing partner James Oketch and Company Advocates to ask him a few questions about how he is managing his firm successfully through the financial crisis. While things are now looking up, his outlook isn’t entirely cherry.
COVID-19 hit hard, it had an immediate effect on the legal services industry. What are your thoughts on the pandemic?
It is true; the pandemic hit most businesses hard. Many companies are still reeling from the effects to date. It appears that this is a catastrophe we shall have to live with for the foreseeable future, whether we like it or not. I mean, it is true to say that the exiled does not choose his Babylon; (we don’t choose your struggles).
There are some striking similarities between this virus and its 19th century predecessor-perhaps lessons from the past can show us our future. The city of London in the 1890s was ravaged by the “Russian Influenza” pandemic which bore a myriad of similarities to the omicron variant. Four million people in England and Wales were ill in the 1889-1890 winters. It was referred to as the “Russian Influenza” because the first outbreak was reported in St. Petersburg in Russia.
Did it change the way your law firm operates?
Well of course, just like many other businesses the world over, it has made us rethink the way we do things. There is a famous quote that goes, “You should be like water making its way through cracks and obstacles. Be formless…Shapeless. You put water into a cup, it becomes the cup. You put water into a bottle, it becomes the bottle. Water can flow, or it can crash.” We have learned to be formless like water and not rigid like ice.
By this I mean that we have been forced to adapt to decreased client interaction at the workplace. These days, more often than not, we have to take instructions and attend Court virtually and electronically.
The working relationship between law firms and their clients is also changing dramatically. As businesses grapple with the fallout from the greatest financial crisis in a generation, a renewed emphasis on cost discipline and rigidity in investment decisions has emerged. It’s no different when it comes to working with law firms.
A more structured and rigid approach to spending, based on acquiring services that provide value with higher quality for affordable prices has emerged. The causes of this change are widely known. The financial crisis and subsequent economic downturn had a substantial impact on firms in a variety of industries. The economic slump has had a negative impact on many of our clients’ revenues. Despite the gradual economic recovery, their focus on cost control is quite evident.
What has the effect been on the Courts in Kenya?
Luckily, the Courts here moved swiftly in adopting an electronic filing system which makes a majority of the courts in the country paperless. Judicial officers are able to access relevant documents on electronic filing portals. Additionally, most court sessions are also now held virtually to avoid crowding or contact that would occur during physical hearings.
There are definitely improvements that need to be made on the new system. People have raised concerns about connection issues which arise on the online platforms. Despite these misgivings, the Judiciary and other arms of government have made tremendous steps towards ensuring that justice is still accessed by all
What are some of the challenges you faced during the pandemic?
The biggest challenge was of course, at the onset of the pandemic. The fear and panic that ensues when contemplating what will happen to you, your family and your business. The anxiety, and the sleepless nights. As a firm, It was important that we took care of our mental health and kept stress at a minimum. Humans can often be prisoners of their own thoughts.
Secondly, working from home was a challenge at first. It takes a lot of discipline to sit down and work at home each day without distractions. It was necessary to draft a timetable to avoid getting confused between leisure time and work hours. I believe that this balance is important in ensuring that both you and your team operate at maximum levels of efficiency.
What are some of the lessons you have learned from the pandemic?
Most importantly, the most vital life-lessons aren’t taught, they are experienced first-hand. Nobody could have prepared us for these unprecedented times.
Secondly, the pessimist sees difficulty in every opportunity. The opportunist sees opportunity in every difficulty.
As a firm, we have learned to always adapt to our ever-changing business environment and client needs. Solutions that were viable five years ago may not be pragmatic or cost-efficient today.
Do you think there are any policies the government should adopt to help restore the economy to a strong growth path?
I believe that at the moment, the Kenyan government and the East African community in general has handled the pandemic fairly well. Moving forward, more reductions, especially in the tax regime, need to be implemented. There needs to be a reduction of the personal income tax rate. Tax relief should also be offered to individuals earning less than USD 500 per month.
We would love to see a reduction in the resident corporate income tax rate, a reduction of the turnover tax rate for small and medium-sized enterprises and an immediate reduction in the Value Added Tax (VAT) rate. The Kenyan government made attempts to reduce these taxes but only for a period of eight months. These measures ought to have been in force for at least 3-5 years, in order for individuals and businesses to obtain much needed reprieve.
There is great need for increased health policy frameworks in so far as financial accountability of COVID-19 funding is concerned. An independent commission on COVID-19 resource management should be set up to streamline financial management and technical efficiency in the deployment of resources. The commission should comprise representatives from the government, the private sector, as well as religious bodies, and the donor community.
Most of your clients work in the private sector so you have a good window onto consumer behaviour. Based on what you see from the different clients you handle, what’s the current state of the Kenyan consumer?
Our clients want and expect two things from us. Firstly, we break down the issue in dispute and give them alternatives, solutions and a way forward that is practical and cost effective. Secondly, which is as important as the first, is that our clients expect us to be available for them and have open channels of communication. No client would like to have a communication breakdown with a service provider for one reason or the other.
When engaging clients, there is no doubt about how crucial legal expertise is to them, but they expect law firms to provide a broader range of attributes. When asked about the most significant factors to consider when instructing a law firm on complex projects, most clients expect a variety of features, including straight-forward pricing, international expertise and reasonable fees. Many firms tend to overlook these crucial elements. They are far more inclined to regard legal expertise as the most important factor — clients value this as well, but consider it as merely one of many things that firms should be able to bring to the table.
Do you think the worst part of the crisis is now behind us?
We’re not out of the woods yet. The worst of the downturn may be over but law firms still face a challenging environment. The list of obstacles is quite long. Practices face pressure to reduce their pricing, new business structures, a fast-evolving regulatory environment as well as a paradigm shift of business focus to new markets. In an environment of such monumental change, managing relationships with our clients has become extremely vital.
Our clients are also facing a myriad of challenges. The changing regulatory and legislative environment affects them too , they’re pushing on but still struggling to find their footing in the post crisis world. All in all, these are exciting times and there is room for growth. Unlocking the potential, however, will involve changing our existing business models and reconsidering our geographical focus altogether. The need for professional and commercially-oriented legal advice will be vital to ensure long-term growth
What next for you and the firm?
We are seeking to expand our operations regionally and continentally in order to have a bigger footprint than we already have at the moment. We are also looking forward to working with other like-minded professionals that are ambitious, want to continually grow, move forward, innovate and succeed.
