Plea for government grants to help law firms manage debt explosion

The government should make grants comprising 5% of turnover available to law firms which will have accumulated massive debts by the time they are allowed to reopen their offices, a managing partner has said.

Greg Powell, of Powell Spencer & Partners in north London, said firms will have massive accumulated debt, VAT and tax deferrals, loans and unpaid bills when they reopen. He suggested the grant could be a percentage of turnover – information already available as the figure is required for professional indemnity insurance forms and appears in the company’s accounts.

As a result of declining crime work, which has fallen ‘off a cliff edge’, Powell said some staff at his firm have been furloughed under the coronavirus job retention scheme. Under the scheme, the government covers 80% of an employee’s salary. Powell's firm has topped up wages so staff will receive a full salary for April.

Powell said he knew many firms that have tried to make use of the job retention scheme. The number of staff needing to be furloughed at his firm could change depending on whether there is, for instance, an uptick in police station work if remote working practices are established.

The Law Society and practitioner groups have worked with police and prosecution chiefs to agree a national protocol for interviewing suspects. Powell, a former president of the London Criminal Courts Solicitors' Association, said he was not convinced that it is safe to enter police stations. Lawyers have reported inconsistent approaches by police forces across the country.

No one in the family team at Powell's firm has been furloughed, he said, because ‘work is continuing in the family courts’.

Powell is not alone in calling for grants. The Law Centres Network said most law centres are small charities and cannot make much use of the government’s small business relief measures. Julie Bishop, director of the Law Centres Network, told the Gazette last week: ‘We’re not in a position to guarantee to repay loans. We cannot fundraise to repay a loan. We need grants.’

*The Law Society is keeping the coronavirus situation under review and monitoring the advice it receives from the Foreign & Commonwealth Office and Public Health England.

• Find advice and updates here.