law firm furlough claim

Hey, it's a business.


Extremely profitable law firms have been claiming furlough payments even as their equity partners pay themselves huge sums.

The UK government has published the names of businesses which claimed furlough cash between December 2020 and April 2021.

The figures reveal that US-based firm Reed Smith milked UK taxpayers for between £50,000 and £125,000 during the five month period, as  reported by the Law Gazette.

Reed Smith's latest results show that its global revenue increased by 5% to $1.31 billion last year, and its equity partners were paid an average of $1.5 million, up from $1.3 million the year before.

But every little helps, so the firm has continued to accept the generosity of UK taxpayers, long after it rolled back the 40% reduction in monthly drawings for Reed Smith's equity partners which it imposed as a precaution against the impact of Covid.

A Reed Smith spokesperson told RollOnFriday that until recently six staff from its facilities team were on the flexible furlough scheme, working alternate weeks. The firm did not respond when asked if it had any intention of paying the money back.

Lots of other firms have reimbursed the government after their financial performances exceeded expectations, including Norton Rose Fulbright, DLA Piper, Burges Salmon, DAC Beachcroft, Osborne Clarke, Irwin Mitchell and Eversheds Sutherland. Some, like Clifford Chance, never claimed any money in the first place.

However, RollOnFriday can reveal that several other firms are still extremely keen on the publicly funded Covid kitty and have extracted even greater amounts than Reed Smith, despite enjoying a bumper 2020.

The government’s database shows that Scottish firm Thorntons took between £250k and £450k in furlough payments between December 2020 and April 2021, despite recording an £8m profit last year. On average, the firm actually paid its partners £15k more in 2020 than in 2019, and its highest paid partner raked in £260k, which was £35k more than in 2019. Thorntons declined to tell RollOnFriday how much it had claimed in total from the furlough scheme or whether it would be paying it back.

Thompsons Solicitors, which specialises in representing unions, called on the proletariat to alleviate its pain by claiming up to £250k in furlough cash in the five month period to April 2021. Yet the firm recorded profits in 2020 in excess of £7.5m, enabling Thompsons to defy Covid expectations and pay its highest-earning partner £404k, £50,000 more than the year before. Up the workers!

Tom Jones, head of policy at Thompsons, told RollOnFriday, "As a firm, we have staff who for various reasons we have had to furlough".

Jones said, "The first priority for any profits will be to recognise all our staff for what they have been through. We will look to furlough repayment once the financial ramifications of the pandemic - for us a significant fall in personal injury case intake which has implications in future years - have been fully assessed".

Of course it won't need to recognise former staff, like those on fixed term and locum contracts it axed during the pandemic.

Ince Gordon Dadds, which won the Golden Turd in 2019, claimed up to £100k in taxpayer cash between December and March, despite having recorded a massive profit in 2020 of £18.8m, over £15 million more than in 2019.

Ince Gordon Dadds also declined to disclose how much it had claimed from taxpayers in total, or whether it would pay it back.

Meanwhile, Plexus Law, another personal injury firm and former Golden Turd winner (is there a pattern here?), claimed up to £275k in furlough cash over the five month period, having made £11 million in profit in 2019. The PI firm may have hit choppier waters since then, but it's not possible to tell as Plexus's latest accounts are four months overdue. The firm did not respond to a request for comment.

Other firms appeared in genuine need of furlough cash, though not necessarily because of Covid.

Personal injury specialist Simpson Millar has recorded substantial losses for several years, going so far as to teach its lawyers how to use less milk in their tea. Its previous owner, Fairpoint Group, went into administration in 2017 and a funder, Doorway Capital, has been propping up the firm ever since.

Simpson Millar made a £7.7m loss in 2017, a £6.3m loss in 2018 and, according to its latest accounts, a £5.6m loss in 2019. Which might explain why it has claimed such an enormous amount from taxpayers: the latest government figures show the firm took up to £850,000 in furlough money between December and April this year. It did not respond to a request for comment.

RollOnFriday has been told that a number of firms have taken furlough cash and told staff to keep in confidential. If this has happened at your shop, please let us know in confidence here.

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Comments

Anonymous 16 July 21 07:30

Taking the cash is one thing. Not paying it back while you make bank and buy a new sports car, as millions suffer unemployment and businesses implode for want of government support, is quite another.

Likey Likey 16 July 21 08:19

Government panels should exclude / eject law firms which took the money yet had high PEP. 

 

Anon 16 July 21 08:23

There is something perverse about a law firm with turnover up claiming furlough, I accept it was designed to maintain employment. But it was always made clear that employers should accept it where needed. Not where they needed bigger spots cars, houses etc. Reed Smith look chiselling and borderline unethical over this. 

Anonymous 16 July 21 08:24

1970s law firm Freeths seem remarkably proud to have paid back their benefits from the state. Slow hand clap for their marketing team for this one… 

https://www.insidermedia.com/news/national/freeths-pays-back-job-retention-scheme-funds

Anonymous 16 July 21 08:33

What about if you took the furlough money but then denied that you’d ever had it?  Would that be really bad? 

Anonymous 16 July 21 09:10

Evil Tories stealing from the most vulnerable in our society! BoJo has blood on his hands for this and must be held accountable!

Anonymous 16 July 21 09:16

My former firm (big NW based known for its insurance work) put people on furlough claimed the cash and got everyone to agree to pay reductions and then paid partner bonuses. I’ve not seen them say they’ve paid it back or their staff….

Anonymous 16 July 21 09:30

The question is, will a certain firm that is considering and IPO pay back their furlough money or are they going to try and raise money from investors as well as the government...

Ouch 16 July 21 09:43

It is an awful look for the industry (and the firms in question) to have firms increasing PEP and still taking furlough cash.  It's hardly being used as the lifeboat in a storm its meant to.  

I am surprised the Reed Smith spokesperson could keep a straight face "yes we have $1.3bn in revenue and PEP $1.5m but we couldn't possibly afford to pay the salaries for six members of support staff who are only needed part time at the moment".  I mean seriously, according to its website Reed Smith has 119 partners in London - we're talking £500 to £1000 each to cover the money its claimed from the furlough scheme cited by Roll On Friday - that the partners would rather sponge off the tax payers than give up £1000 tells you a lot about them (which seems entirely consistent with what I have been told working at Reed Smith is like).

Anon 16 July 21 10:54

I don't disagree with the spirit of the article, but I wonder whether shaming firms for taking furlough money etc will mean that, during the next crisis, firms will generally be more likely to simply lay off these kind of staff?

There seems to be an assumption here that, had these firms not used the furlough scheme they would have just paid these staff themselves, because they can afford to. I'm not sure that's a valid assumption.

Anonymous 16 July 21 10:54

Thorntons - that's put me off my Viennese truffle.. Come on, you are better than that  

Ken 16 July 21 10:59

My shop took advantage of the scheme, but told us on a 'town hall' call to keep quiet about it.  We left the scheme before the point in time when participation would be made public. 

The firm also reported that it had made no salary cuts.  Which was bollocks.

We then reported revenues of $1.5+ billion and a 5%+ increase in revenue.

Anonymous 16 July 21 11:14

Anon 10:54, firm haven’t been shamed for taking furlough money – in fact they’ve been praised for taking it and paying it back when they did better than expected - firms have been shamed for taking furlough money and not paying it back (or saying they will pay it back) when they’ve made massive profits.

I don't believe in redistribution 16 July 21 11:31

My (US) firm didn't take furlough money, but I've no problem with those which did.

The government taxes us at a ridiculous 47% (incl. national insurance). The government is spending money which I earned, and which it then confiscated from me on pain of prosecution, to redistribute in accordance with social whims, pursuant to the relevant legislation. 

If that legislation allows firms to claim for X, then it allows them to claim for X, whether a bunch of lefties like it not. Spare me the borderline Marxist whinging that 'It's not fair - they have lots of money'. Firms with a high PEP are being taxed exponentially more than they are claiming in furlough. All furlough is doing is allowing them to claw back some of the money expropriated from associates and partners, to reinvest in their own people. Good luck to them.

Jolyon 16 July 21 11:32

Yet another sleazy payoff for Boris' donor chums! This would never happen in Germany!

Greed isn't good 16 July 21 12:01

@I don't believe in redistribution 11:31 - you embody the mentality of a US law firm. You think taxation is bad and that anyone who has a moral problem with lawyers taking money they don't need from the taxpayer (which includes you, remember) is a "leftie" / "borderline Marxist".

You are the reason people think lawyers are out of touch. You are out of touch.

Unless you are a parody, in which case well done.  

Anonymous 16 July 21 12:19

Would love Roll on Friday to publish all the names of firms which took the Furlough alongside estimated PEP. 

Anonymous 16 July 21 12:39

My ex firm (as in ex boyfriend) was a complete scum. They claimed furlough money, opened a second office, hired a director's cousin to an admin role, then made the lawyers redundant. Cockneys.

Anonymous 16 July 21 16:05

My firm panicked at the beginning, put a load of staff on furlough and suspended all pay reviews. Turns out the year to 31.3.21 was a record breaker for turnover (and probably profit). But still no pay reviews, even for those teams that aced their targets.

Annonymoose 16 July 21 16:49

@Anonymous 09:16

 

Partners were not paid bonuses last year until pay was reinstated to staff and yes all employees have received reimbursement for the 3 months pay reduction.

 

Anonymous 16 July 21 21:37

@Anonymous 16:05

Same story at my firm.  Record turnover, most teams at full capacity, paid back all furlough money, but lawyer salary reviews still haven’t taken place.  The cash is going somewhere isn’t it…

Procurement bod 17 July 21 09:03

No issue with furlough but where firms have made solid profits there should be moral consideration to paying back.

 

this needs to form part of public procurement and tenders going forward. Local authorities, housing associations etc

 

did you take furlough cash?

did you make profit beyond those sums? 
 

if you did make profits like that did you pay back the cash?

 

if firms didn’t then such organisations will take this into account.

 

 

if the answer is no then they shouldn’t 

I don't believe in redistribution 17 July 21 09:21

Dear “Greed isn't good”,

I have never understood why it is “greed” to want to keep the money you have earned but not greed to want to take somebody else's money.*

Your plaintive mewling and condemnation of “lawyers taking money they don't need from the taxpayer” is a category error.

You are confusing a political position with morality and, worryingly - if you and any of the other critics above purport to be practising lawyers - you appear to be unable to distinguish your political fantasies from the law. Competent lawyers advise clients on the law, and they follow it themselves. The furlough legislation does not include a condition precedent that organisations claiming funds “need it”. That additional criteria is one you dreamt up in your Maoist delusions.

If you are typical of the calibre of intellect in English law firms, no wonder that US firms like ours are crushing you. And we are: look at (a) our year-on-year PEP and revenue increases; and (b) your redundancies, constant haemorrhaging of associates, and palpable jealousy.

We’re regularly hiring laid off lawyers to do doc review for us though, so you might get to work for us eventually. 

 

* Not a original observation, credit to the economist Thomas Sowell, originally in one of his books, then much later cited on Twitter: https://twitter.com/ThomasSowell/status/1166338513413058560

Anonymous 18 July 21 08:26

Looking around I think that some firms would have been smarter to take public money in the short term and then pay it back if possible, rather than make redundancies and then finding it very difficult to recruit to replace the people who were made redundant.

Human 19 July 21 12:24

While I am not of the opinion that greed is good it's completely unrealistic to create a legal entitlement to furlough money for employers who don't absolutely need it and expect them not to claim it. You would be negligent not to advise a client of the entitlement regardless of the morality.

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