Law firms pay back furlough cash

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Ray Berg, managing partner at Osborne Clarke, said the firm had repaid the furlough funds to the government.
Photo: Osborne Clarke

A number of UK law firms have handed back government furlough money having experienced better than expected business in the past few months.

Norton Rose Fulbright, Osborne Clarke and Herbert Smith Freehills have all announced they will pay back the support grants given to them by the Coronavirus Job Retention Scheme, which is due to wind up in two weeks’ time.

Many law firms furloughed business and back-office staff while the government could cover 80% of wages, but considered other options with lawyers such as temporary pay cuts or shorter working weeks.

Herbert Smith Freehills executive partner Alison Brown said the firm had repaid money accepted from HM Revenue and Customs in July, and also returned furloughed workers earlier than expected.

Another City firm Osborne Clarke has repaid furlough money for 116 employees having exceeded its performance expectations.

The firm had previously asked UK employees who earned more than £30,000 to take a 7% pay reduction for an 11-month period, although promised to backdate pay for those affected if it reaches its revenue targets for 2020/21.

Ray Berg, managing partner, at Osborne Clarke, said: “As the summer progressed, client instructions, billable hours and cash flow did not reduce to the extent we had feared. We were then pleased to bring back these people and exit the furlough scheme by 3 August.

“As we approach our UK half year, while revenue is below our original target which was set pre-Covid 19, it has held up better than we had initially feared.

“Osborne Clarke remains a profitable and growing firm. We, therefore, made a decision to repay the funds we received from the UK government under the furlough scheme. This money has been taken from the firm’s UK profit. It will not have any impact on whether or not we hit our revised 2020/21 financial target.”

Norton Rose Fulbright said it had repaid furlough money that it had used for a small number of UK-based business support staff, and dropped a scheme to allow staff to work a four-day week at 80% pay.

It has been estimated that around £215m out of a possible £35.4bn of CJRS money has been returned since the start of the pandemic.

A number of employers in other sectors to have returned furlough money include housebuilders Barratt and Taylor Wimpey and retailers John Lewis and Games Workshop.

The job retention scheme closes on 31 October and will be replaced by the Job Support Scheme.