Law firms in profit despite pandemic; firms reinstate NQ pay
updated on 22 February 2021
More than 90% of UK law firms that responded to a survey by accountancy network MHA said they had made a profit since March 2020.
In May 2020, 38% of firms reported they expected a “major” impact on fee income as a result of the pandemic. However, recent results demonstrate that this expectation has since been reversed – in December 2020, 43% of firms reported either “no impact” or a “minor” impact on fee income.
Of the 91% of firms reporting a profit since March 2020, almost 20% said that they experienced profit growth of more than 20% during this period.
The Coronavirus Job Retention Scheme, which 87% of firms that participated in the May 2020 survey took advantage of, contributed to a reduction in outgoings and therefore profits were better than expected.
City firm Hogan Lovells reported a jump of more than 30% in partner profits to £1.54 million last year, according to the Law Gazette.
The firm’s Chief Executive Miguel Zaldivar said: “The sectors that continued to demonstrate a robust performance include financial institutions, life sciences, technology, media, and telecoms, and automotive. At the same time we saw a strong performance in transactions, regulatory work, and disputes.”
Meanwhile, silver circle firm Macfarlanes has joined Bryan Cave Leighton Paisner, Hogan Lovells and Clifford Chance in restoring newly qualified (NQ) lawyers’ pay, following cuts as a result of the pandemic. Macfarlanes has restored NQ salaries to £85,000.
Firm-wide salary cuts at Osborne Clarke have ended early, with staff due to have their deducted earnings repaid. Those earning more than £30,000 were affected by the reductions, with the firm making the decision to reduce these salaries by 7% for an 11-month period which began in June 2020. Following reviews of the pay reduction, the firm is set to reinstate normal pay from February onwards, according to Legal Cheek. Eversheds Sutherland is also due to repay staff whose salaries were cut in a bid to weather the economic impact of the pandemic.
