The adverse economic effects of CoronaVirus is being felt by everyone. CA and Law Firms have tightened their seat belts with a view to preparing for the contraction in demand for professional services
The law firm model has fundamentally been challenged: Cyril Shroff
Cyril Shroff, the founder-partner of M/s Cyril Amarchand Mangaldas, a well-known law firm, did not mince any words when describing the impact of the CoronaVirus on the legal profession.
He described it as a “black swan event” which is “rippling through like an earthquake“.
He pointed out that there is a “demand contraction” owing to the lockdown.
He also stated that the law firm model has been “fundamentally challenged“.
“I believe that the World of law firms will see a fundamental reinvention of the law firm model with all the different ingredients of the enterprise being up for review and modernisation“, he added.
The “Work From Home” concept will become more prevalent, which will in turn result in a contraction of the need for real estate, he opined.
Survival mindset requires bold decisions
“We are in survival mindset and unafraid to take bold decisions,” Cyril Shroff said, according to a report in Bar and Bench.
He pointed out that while the firm will not implement any job cuts as of now, the ‘fixed’ compensation will be moved to ‘variable’ compensation.
Also, the Equity Partners of the firm will not draw any salaries for this financial year.
Lawyers with an annual package of Rs. 25 lakh and below will not face any cuts for the present.
“The firm will review its decision in June. This is all subject to how the situation changes with the pandemic,” he added.
Partners’ salaries reduced to build a ‘war chest’: Khaitan & Co
Khaitan & Co, also a well-known firm of lawyers, has also taken proactive and defensive steps.
It announced that partners’ salaries would be reduced by 20% though lower categories are spared as of now.
“This is to proactively help with cash flows/build a war chest, until the situation stabilises. This is more in the nature of a contribution to our firm, to help tide over the current situation and will be restored during the course of the year or when revenues stabilise,” Amar Sinhji, the Executive Director of the firm was reported as saying.
Closure of all Courts and Tribunals has crippled work: Agarwal Law Associates
Agarwal Law Associates, which is said to be one of the largest law firms in the Supreme Court, painted a grim scenario for the legal profession.
“The closure of all the courts and tribunals after first week of march of this month has crippled the work. There is no clear visibility on when the lockout will end and when the courts will resume functioning normally,” it was stated.
“In light of these developments , we are compelled to take some harsh, but hopefully, temporary measures. With immediate effect, we are compelled to reduce compensation of all by 30 per cent (except for those under 40000),” it announced.
However, the giant law firm expressed confidence that it would bounce back as soon as things normalize.
“We are one of busiest and most productive law firms. We will therefore be the first off the block when normal court activity begins,” it stated.
CA Firms have also cut costs
PWC and Deloitte, the largest MNC firms in the Country, have already announced various measures such as deferment of promotions, increments and bonus to partners and staff with a view to combating the CoronaVirus slowdown.
Top CA Firm Reveals Strategy To Tackle CoronaVirus Slowdown https://t.co/K9jhUkIDEL
— itatonline.org (@itatonlineorg) March 28, 2020
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