Former Linklaters lawyer Trevor Clark warns bosses not to leap straight for taxpayer cash
City firms shouldn’t put staff on furlough with government money just to protect their profits, a former magic circle partner has warned.
Trevor Clark, formerly a banking and finance specialist at Linklaters who now teaches at University College London, says that partners should take a lesson from their fellow millionaires at Liverpool Football Club.
Liverpool recently rowed back on a plan to use the government furlough scheme to stop paying its non-playing staff. But other Premier League clubs such at Tottenham Hotspur are cracking on with furloughs — while keeping star players on full salaries.
Clark advises that “firms that are yet to decide what to do about furlough might take a leaf out of Liverpool’s, rather than Tottenham’s, book. I say this as a both a fan and a former player (of big corporate law firms in London)”.
During the 2008 financial crisis, partners made junior staff redundant rather than sees their profits fall. Clark reckons that law firm bigwigs are “dusting down the playbook from that era right now”.
This time around, law firm staff are being temporarily furloughed rather than made redundant, with the government paying 80% of their salaries.
But Clark says that firms should avoid using the furlough scheme if the only aim is to maintain partner profitability, arguing among other things that solicitors have professional public interest duties that don’t apply in other industries.
He says:
“Alright, the SRA probably did not have this unprecedented situation in mind when drafting its code of conduct, but the existence of this rule, as well as other formal and informal norms of professionalism, requires them to take a broader perspective at times like these, and to not just focus on the bottom line.”
Writing on the Lawyer Watch blog, Clark says that taxpayers won’t be impressed to see their cash diverted to shoring up the profits of huge companies. “If accessed at all”, the ex-Links man says, “this should only be if a firm is facing collapse, having first tried other measures”.
And it may not come to that. The UCL academic points out that law firms will still be able to pick up work during the pandemic, which is a different beast to the 2008 crisis.
Earlier this month, former Clifford Chance Tony Williams called for partners to show leadership by “tightening their belts” rather than making others the hit.