Big Law’s response to the Coronavirus
As we get more used to various modified forms of working in the midst of COVID-19, our private practice consultant Ben Quarry assesses some of the different measures law firms are implementing to protect their businesses and how this is impacting lawyers around the world.
- Partner Drawings and Cash Calls: We have seen limitations or deferrals on partner drawings imposed widely across the market; some firms have asked partners to dip into their own pockets to ease their cash flow issues.
- Freezing Salaries/Promotions: Promotions and annual salary increases associated with moving up the PQE bandings are being put on hold. In some cases, this has even included delaying promotions to partnership.
- Temporary Salary Reductions: These have been up to as much as 25% for fee earners and 10-25% for non-fee earners. Quite how long these temporary measures will continue in place remains to be seen.
- Bonuses: Many associates have been told that their bonuses will be deferred (either partially or wholly) until later on in the year.
- Working from Home: Now the norm, firms have had to move quickly to ensure that employees have the necessary infrastructure to work efficiently remotely. Some firms have had to buy equipment or furniture for people or provide allowances to cover costs of these.
- Shift Working: In jurisdictions where the lockdown is less strict, some teams are working in shifts - alternating days or weeks of working on site/remotely to limit the number of people in the office at any one time. In some places this is compulsory – for instance in the DIFC in Dubai it is only permitted to have 30% occupation of offices.
- Reduced Hours: Some firms have offered their staff the opportunity to reduce their hours and pro-rate their salary accordingly. In theory a 4-day week for a 20% pay cut sounds fair, but it’s unlikely that clients/partners will respect the sanctity of this day off.
- Furloughing: Many firms have made use of the UK Government’s furlough scheme for both fee earners and (more often) non-fee earning staff, generally with salaries being topped up
- Redundancies: There haven’t been the mass redundancies seen in the last financial crash yet, but some firms are starting to let people go and, the longer that the crisis continues, the more these numbers will increase. Some new hires are being stood down.
- Office Closures: Whether caused or simply expedited by the impact of the virus, we have seen firms shutting some of their overseas offices.
- Trainee Retention: We don’t yet know what all of this will mean for retention rates. However, we are seeing internal processes being delayed and, in some cases, qualification dates are also being pushed back to reflect part-time or furloughed periods of the training contract. New training contracts may be extended beyond 2 years.
- Recruitment: Unless there is a business critical need, most hiring has been paused until the world returns to normal. Processes that are still moving tend to be slower than normal and everyone is getting more comfortable with Zoom interviews though there remains reluctance to resign or join a new firm on a virtual basis.
If you would like to discuss further how the Coronavirus is impacting the market or would like to share what measures your firm has started to implement in response to it, please contact Ben Quarry.