Week one of lockdown: new enquiries dived, furloughing began


McCrum: Some firms have made hard decisions already

The first week of the coronavirus lockdown saw new enquiries fall by up to 60% and firms start furloughing staff at once, research by a leading consultant has found.

But they are “up for the fight”, he said.

Simon McCrum – former managing partner of Darbys, which was bought by Knights in 2016 – is planning to conduct surveys every week of the lockdown to see how firms are coping.

His first involved 12 firms, ranging from a national chain and a regional heavyweight, to a ‘county’ firm with chain of offices, a single-site high street practice, and a niche practice.

Mr McCrum said: “What they don’t say is just as interesting as what they do say. None have hit the wall. None have given up hope. Quite the opposite – all seem to be up for the fight.”

Perhaps unsurprisingly, the firms that have invested in IT “are seeing immediate and increased returns on that investment now”, while the ones that had completely trialled a disaster recovery plan have done “much better, much faster” than firms which had not.

But they reported a clear drop-off in week one in new enquiries – by up to 60% – with corporate work hit the hardest, followed by commercial property.

“The issue is not just lack of new instructions but also existing deals being shelved. Residential property was worsening too.”

However, long-running personal injury, clinical negligence, Court of Protection and litigation cases did not slow, and private client work has “understandably” increased – “dramatically, in some firms”.

Mr McCrum said that those firms that fared best saw chargeable hours fall in the first part of the week but then recovering by the end “because they grasped nettles and had good IT systems”.

The solicitor continued: “Other firms have been hugely hit – hours were down by up to 30% in a week. Where communications with clients had reduced, so too had chargeable hours, so the message is to get back in touch with clients and keep pushing their cases.”

He discovered that furloughing began “big style”, with some firms making up the 20% of salary and others not.

“Some firms have made hard decisions already in the expectation that this situation is going to run on for quite a while. These range from addressing performance issues to pay cuts.”

Firms’ initial reaction was to rely on their own cash rather than to resort to government-assisted borrowings, the research found.

“There are purges on debtors, there is an increase on asking for cash up-front, and there is even an increase in billing weekly – yes, weekly.

“On the reverse side, firms are cutting marketing spend, but using cheap or free social media channels to ‘come out fighting’.”

Mr McCrum reported that banks “appear to be making the right noises”, but none of the firms surveyed had actually had any money out of them as yet or really had to ask for material support.

Firms’ landlords have responded in a mix of ways, some helpful and others much less so.

“As some firms are already questioning their need for premises as large or as numerous as they presently use, this could come back to haunt unhelpful landlords. Some of the firms see this as a great opportunity for re-engineering their business to take out a lot of cost such as property costs.”

Mr McCrum noted that management at many firms had said how impressed they were with the response of their staff. “As with all adversity, it is a time for bright stars and future leaders to shine.”

He quoted one firm describing the situation as “serious but tolerable – for now”. Mr McCrum added: “Let’s see what the week two survey brings.”

To help law firms understand the Covid-19 crisis and its impacts, and to help them to respond, Mr McCrum is posting regular briefings on his website, giving out relevant parts of his forthcoming book, The Perfect Legal Business.




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