Firms “avoiding radical staff measures” during crisis


Home working: Firms set to change approach

Most law firms have continued to resist radical measures to cope with the Covid-19 crisis, taking “moderate steps in the short term to ensure resilience in the long term”, new research has found.

It also indicated that many practices were set to change their approach to home working significantly because of the experience of recent weeks.

The Institute of Legal Finance & Management and accountancy firm Saffrey Champness conducted the survey of 166 firms – most with a turnover of up to £10m – to follow up the one they did last month in the early days of lockdown.

The April survey found that 77% of firms had instituted furloughing, a figure that rose to 91% in May – although the majority (60%) reduced the workforce by no more than 40%, and almost half of those by no more than 20%.

Researchers said: “This is an encouraging indicator that the majority of firms are looking ahead to make sure they are operationally well placed when we emerge from the other side of the crisis.

“In fact, a lower proportion of participants are taking the most extreme measure of furloughing most staff members; just over 4% of firms are furloughing more than 80% of staff members, compared to 7% last month.”

A fifth of firms reduced hours and pay for staff members who were not furloughed – no more than 20% in most cases.

“While the number of firms that have commenced redundancy negotiations with staff has crept up, standing at 10% compared to 6% last month, there has been no major sea change in firms’ staffing strategies and the feeling is that firms are preferring to take moderate steps in the short term to ensure resilience in the long term.”

But these measures “do not come cheaply”, and almost a third of firms surveyed predicted a fall in profit of greater than 25% over the course of the year, with 10% anticipating that they will now make no profit at all.

These falls were consistent with the overall level of predicted activity, with around a third of participants predicting a fall of more than 25% in fee income. Only 4% expected little or no impact.

But the survey found partners were putting out “a clear message that they are willing to take these financial knocks if it means that they can maintain confidence among the workforce” – 54% of firms have reduced partner drawings, or are planning to do so during May, while 8% have stopped drawings altogether, a marked increase on April.

Further evidence that firms were reluctant “to apply the brakes too sharply” was that only 20% of firms have rescinded job offers, or will do so this month, although pay rises and promotions continue to be put on ice.

The survey continued that most firms felt able to fulfil their regulatory obligations – only 13% predicted difficulty in meeting regulatory deadlines, such as in the SRA Accounts Rules and Companies House filing requirements.

It also found that the rapid move to home-working was set to trigger a “fundamental change” for 8% of the firms surveyed, with staff only attending the office when absolutely necessary in future, while a further 57% thought their policy would change by a moderate to large degree.




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