As lockdown begins to slowly lift across the country and the Coronavirus Job Retention Scheme (CJRS) aka the furlough scheme, is wound down between August and the end of October we are beginning to see large scale redundancies across all industries and this will not exclude the legal profession e.g. top 50 firm Freeths announcing a consultation on up to 80 roles.
Many firms I talk to are anticipating anywhere between a 30% to 50% loss of turnover in the current financial year. There are exceptions; of course, most conveyancing practices are working flat out to deal with the volume of work coming through the doors which is pre-lockdown pent up demand. However, if we continue to see the redundancies mounting this has to question the long-term stability of the economy. A recession is looming and could well be a long road to any form of recovery and not the V shaped recovery some have predicted. This new phase has started with firms making redundancies to highly paid individuals in non-fee earning roles such as HR directors, marketing directors and senior business development roles.
Do we need the amount of office space we had, what services can we profitably offer and can staff remain working from home? These are just some of the questions being asked by the owners of law firms. Some are even asking do we wish to continue at all and shall we merge our practice, that’s if a merger partner can be found in the current climate? These are just some of the questions that law firm leaders are asking themselves and how do we adopt a strategy in these uncertain times?
Despite the reduction in turnover for most firms they are facing one of the hardest professional indemnity markets we have seen for many years. Some firms are facing substantial increases in premiums due in October, others cannot even get cover. Expect a 15 to 20% rise in premiums and then comes the question of obtaining funding for the premiums. Those firms with either Coronavirus Interruption Business Loan Scheme (CIBLS) or Bounce Back Loan Scheme (BBLS) loans have to recognise that although they have been invaluable in the short term they still need to be repaid and are considered a liability when looking for additional funding for professional indemnity premium.
Insurers, banks and other lenders are looking very closely at a firms’ financial stability so we have teamed up with Gemstone Legal who have created a Financial Stability Scorecard to help you judge your own firm’s financial stability.
Solving the problem: Helping law firms meet their financial, operational and regulatory obligations
The Financial Stability Scorecard – powered by Gemstone Legal is a unique free online resource which helps law firms to understand and evidence their approach to finance. Answering a series of ‘yes/no style’ questions (without the need for sensitive financial information) the scorecard will outline what is going well and identify areas for improvement.
The results should act as a basis from which to shape a new cultural approach to financial management.
Results can be used to formulate a strategic action plan, guiding the business in the key areas to adapt and improve the approach to financial management. The action plan allows a firm to evidence to interested parties, such as insurers, lenders and regulators, the firm’s attitude to sound financial management.
- Survey takes less than 5 minutes to complete
- Answer 30 'yes/no' style questions