Law firms are scrambling to hold costs and overheads in any way they can, including eyeing employment changes and payment distributions. One firm that has attempted to avoid taking the coronavirus financial hit is Allen & Overy who have taken a bunch of measures they describe as “prudent management measures”.
The firm has altered its profit distribution to partners, already delaying some bonus payments, as well as increasing the capital commitments from partners and freezing specific investment and recruitment situations.
Bonuses due to be paid to fee-earners and senior support staff in July will be split into two payments with half paid in July, while the remaining half will be paid in October.
Maintaining that the firm was financially strong, it said in a statement that the evolving challenges of the pandemic and the long term impact on markets made their moves sensible.
‘[The measures] include adjustments to the phasing of profit distribution to partners, increasing partner capital levels, deferring certain investments and recruitment, and cancelling events,’ the firm said.
‘For staff, including fee earners and business support staff, we have decided not to undertake annual salary reviews in the first quarter of the forthcoming financial year. We will still award bonuses for this financial year, with bonus payments for fee earners and our more senior support staff split between our normal payment date in July and October’s payroll,’ the statement added.
Boldly Going . .
The firm has also indicated that it will not be withdrawing from its ongoing development by reappointing IP litigation partner Paul Keller previously from Norton Rose Fulbright in New York.
Various law firms are taking action to ensure they remain financially secure. For instance, Reed Smith is reducing partner distributions while Linklaters, Pinsent Masons and Fieldfisher are all considering a reduction or a delay to the distribution of profits to partners to maintain reserves and their capacity to deal with the business fallout from the pandemic.
The ongoing changes continue to challenge law firms as to how best to handle the crisis and while some have been slower to act, others have taken a proactive approach to shore up their resources.
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