Top-100 firm Keystone Law has stated that it will not furlough any staff during the coronavirus crisis, in a thinly-veiled swipe at competitors rushing to cut costs.
James Knight, chief executive and founder of the listed remote working firm, used today’s financial results announcement to make clear there was no intention to use the government’s job retention scheme.
A number of leading firms have collectively furloughed hundreds of staff since the lockdown began.
Knight said that his firm was in a good position to weather the storm, but had opted for a different response to others in the same position.
‘We are very likely to see a meaningful reduction in client instructions, particularly in terms of corporate transactions, and a consequential drop in anticipated earnings,’ he said. ‘However, I do not believe it is ethically responsible to take government money designed for genuinely cash strapped businesses, in order to maximise our own profits.’
The firm told the London Stock Exchange today that revenue had increased 16.3% to £49.m in the year ending 31 January 2020. Adjusted profit before tax was up 12% to £5.8m.
Keystone also continued its recruitment drive with the total fee earners increasing 22.4% to 393.
In terms of the coronavirus and current trading, the firm said that billing and cash generation had remained strong and in line with expectations, but since the pandemic outbreak the group had noticed a meaningful decline in new instructions. The company has £4.4m in cash reserves and is debt-free and said its business model, aimed at delivering services remotely, was well suited to the current restrictions.
Keystone said its group is well diversified across legal services, sectors and specialisms, so is not dependent on any area where revenue might have dried up.
Last month the Keystone board opted not to propose a final dividend, saying distributions would return when circumstances allow.
Writing in the financial statement, non-executive chairman Robin Williams said: ‘We have modelled a range of scenarios, including some which are more negative than what we currently consider the most likely outcome for the group, and under all of these scenarios the business remains profitable and cash generative for this financial year.’
Keystone shares dropped 6.1% to 420p following today’s announcement. In the month before lockdown shares traded for as much as 620p.