City law firms repay furlough cash following strong business during pandemic

Several large British law firms have handed back government furlough cash after seeing stronger-than-expected business during the pandemic.

Square Mile-based firms Norton Rose Fulbright, Osborne Clarke and Herbert Smith Freehills have all paid back wage subsidies handed out by the chancellor, following strong demand for their legal services during the coronavirus crisis.

Read more: Business bodies urge chancellor to ‘go further’ with new furlough scheme

Chancellor Rishi Sunak introduced the furlough scheme alongside the nationwide lockdown in March. The government support, which is due to wind down at the end of the month, initially covered 80 per cent of wages for employees unable to work during the pandemic.

The bulk of the UK’s biggest law firms furloughed business support and office-based staff, but most chose not to rely on state support to prop up the wages of lawyers.

Herbert Smith Freehills, which employs almost 5,000 people around the world, has now repaid money accepted from HMRC in July, according to executive partner Alison Brown. 

It also returned furloughed workers earlier than in expected, after “stronger business performance than we had initially anticipated,” Brown said.

The group reduced partner profit distributions at the outbreak of the pandemic and postponed pay reviews. It said it would still hand out bonuses for the year through staggered payments.

Osborne Clarke managing partner Ray Berg last week said the law firm brought back its 116 furloughed members of staff in August after its half-year results were “better than we had initially feared”. The company also paid back HMRC cash last week.

Norton Rose Fulbright has also now repaid furlough money, which it used to support a “small number” of its UK-based secretaries and business support staff.

It has also dropped a scheme rolled out in the initial wake of the pandemic which allowed staff to work a four-day week at 80 per cent pay. The group said partner distributions, pay rises and bonus payments have also been deferred.

More than 90 per cent of UK law firms furloughed staff during the pandemic, even though less than a third said they expected their profits to fall by more than 25 per cent this year.

Read more: Rishi Sunak extends furlough scheme for businesses facing lockdown

Just £215m out of a total £35.4bn paid out in furlough cash to UK businesses has so far been returned since the start of the pandemic.

Major housebuilders Redrow, Barratt and Taylor Wimpey have returned all the furlough money they claimed during the crisis, as well as major brands Primark, John Lewis and Games Workshop. 

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