So, the starter’s gun has fired. We now know the rough framework for the route back to more normal levels of trading. Things are likely to move fast. How can you now prepare? I have written previously with some major areas to consider: https://www.hunningsconsultancy.co.uk/coming-out-of-the-covid-19-lockdown-some-practical-steps/ . I would like to explore some more practical steps.
Yesterday (12th May) the Chancellor announced that the furlough scheme would be extended to the end of October. It would run as it is now to the end of July. Then it would be modified (details to be released by the end of May) but from August he would expect employers to share with the state the burden of the cost of the scheme. I suspect that is when the financial squeeze will start to bite.
What does that mean?
That’s 11 weeks. At present the furloughed staff have 80% of their wages paid by the state with employers making up the remaining 20% from their reserves or income. From August the government expects employers to share the cost. What does that mean? Here’s a possible scenario: the state will pay 60% in August with a taper down to 0% by the end of October. I don’t think that is unrealistic. They have a duty to protect and manage tax payers’ money as well. If the employer is having to fund 40%, and rising, of the wages of staff then they will want some productivity from them. This is exactly what the government wants – to ease people back to work. But will there be sufficient work for them to do? Will they be able to work remotely or in the office with the appropriate PPE, social distancing and transport? There needs to be some serious planning and with that careful evaluation of your business. The extension of the furlough scheme to the end of October is clear recognition that the current conditions are a long-term reality. So, firms who went into hibernation hoping that this would pass quickly will now need to start to adapt to the new working environment.
Will there be enough work?
If you relied on clients walking in through the door your world has changed dramatically. Even if not the ‘norms’ of before have shifted. New work is much more likely now to be found through relationships and on-line routes. I would strongly advise you to:
Doing the work
Here is a link to the latest government plan to recovery issues 13th May 2020: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/884688/Our_Plan_to_Rebuild_The_UK_Government_s_COVID-19_recovery_strategy__large_print_version_.pdf Page 56 is the start of what they write about returning to work. Each of you will need to work out what you will need to do for your business. Please feel free to contact us to talk things through. [email protected] or 07887 524507. If there is a new wave of people returning to work in August, then there may be a new wave of people who need to be fitted up for remote working. You will need to advance plan for that – equipment, training, bringing them up to speed on new working methods. (If you don’t have IT support, we can recommend some we use and trust.)
Many law firms have put on hold plans to move to cloud-based case management systems because staff are on furlough. Now may well be the time to move forward with these projects so they can hit the ground running with the new technology. The new systems should also bring efficiencies which either allow you to do more work more cheaply and more flexibly – or on the flipside with less staff. We can advise and assist with the implementation and training, put you in touch with people who can advise on the HR side of things and also advise and assist with review of your current processes to see where efficiencies can be achieved. If you change your policies and procedures your OPM (Office Procedures Manual) and other compliance documents might need a revision. Certainly, with regard to social distancing and PPE, flexible working, protecting client data out of the office etc.
Financing the changes
First thing to say – I’m not an accountant, so take proper financial advice. However, here are some thoughts. I’m not an advocate of taking out loans for everyday costs - but, if it is to create profit then that is probably OK. There is a lot of help out there at the moment with perhaps less stringent criteria than usual. Our bank has contacted us to ask if we want to take up a bounce back loan. Up to 25% of turnover, no interest to pay for 12 months and thereafter 2.5%. (If you are a high street firm, can you apply for the grants the local authorities are giving out? I know they’re aimed at retail, but as you occupy high street retail space maybe it’s worth a shot. You don’t have to pay back a grant.)
What would I use the loan for?
Both of these should result in a growth in profit to pay off the loan and build the business. We have a number of trusted contacts who can help you with b) above, if you do not have your own. Feel free to contact me: [email protected] or 07887 524507.
For both a) and b) above you will need to plan for them to be successful. Again we can help. If you are to be advertising then think through carefully how you will handle the enquiries to maximise conversion of the leads. Lawyers are notoriously bad at handling and converting enquiries (effectively squandering their investment). Consider using electronic signatures to get retainer documents signed – which will help in converting them (again we can put you in touch with firms that offer this).
These are just a few thoughts. I would welcome you to add yours as comments.
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