Busy law firms repay state furlough cash

Several large UK law firms are paying back government furlough cash used to subsidise wages after business has been busier than expected since the outbreak of the pandemic.

International groups including London-based Norton Rose Fulbright, Osborne Clarke and Herbert Smith Freehills have refunded cash and unwound cost-saving measurers as demand for services holds steady.

Law firms were hit by a decline in big-ticket transactional work at the start of the crisis and responded by cutting lawyer salaries, deferring payouts to partners and delaying bonus decisions to shore up cash.

The majority of the UK’s largest law firms also furloughed business support or secretarial staff who were no longer needed when the schemes became available in March.

However, most chose not to rely on state support to pay the wages of relatively highly paid lawyers, fearing the reputational backlash if they were seen to be using the programme to keep profits high.

Since then, many UK firms have experienced less of a dent to their revenue around their half-year point than expected, triggering a rethink on help they have accepted.

Norton Rose has now repaid furlough cash used to support a “small number” of UK secretaries and business support staff and dropped a scheme allowing staff to switch to a four-day week on reduced pay.

And in news first reported by The Lawyer magazine, Alison Brown, executive partner at Herbert Smith Freehills, said the firm had paid back money accepted from HMRC.

It had also brought back its furloughed staff members in July after “stronger business performance than we had initially anticipated”, Ms Brown said.

Osborne Clarke UK managing partner Ray Berg said last week the firm had brought back the 116 furloughed members of staff in August after its half-year results were “better than we had initially feared”. The firm paid HMRC back last week. Charles Russell Speechlys said it had repaid money, too.

Other groups are locked in consultation over whether or not to follow suit. 

Gowling WLG, a Canadian-UK tie-up with 1,400 lawyers, entered talks on Tuesday to decide whether to repay HMRC, while Mishcon de Reya and Eversheds Sutherland are also consulting.

Many other law firms chose to self-fund their own furlough schemes in order to avoid reputational fallout from using government programmes.

Travers Smith, a more than 200-year-old City stalwart, placed a number of staff who could no longer perform their roles on leave with training offered, at 100 per cent of their salaries. 

“We’re a very successful firm and it didn’t feel right to take government money in the grand scheme of things,” said managing partner David Patient.

Hogan Lovells placed 30 members of staff on fully paid leave including client receptionists, team assistants and a number of individuals in its recruitment team.

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