The Law Society is lobbying the government, banks and regulators to ensure small and medium-sized law firms can draw on emergency support during the Covid-19 crisis.
Loans of up to £5m have been made available to small businesses through the Coronavirus Business Interruption Loan Scheme. Businesses with revenues of under £45m can apply through more than 40 lenders approved to provide finance. The debt can be provided as a normal term loan, an overdraft, or invoice finance or asset finance. It is offered interest- and fee-free.
However, Chancery Lane is known to be concerned that individual lender requirements may prevent firms from accessing these loans – for example, demands for personal guarantees or security. The Society is raising this and other issues in talks with the Department for Business, Energy and Industrial Strategy. It stresses that the big four banks will not seek personal security for loans under £250,000.
Paying for professional indemnity insurance is another headache for many solicitors, with an estimated 20% of law firms currently at the point of renewal. Chancery Lane believes the loan scheme should be able to help spread the costs of renewals, and is also in talks with the SRA about what more can be done to support solicitors.
Some law firms have also been seeking clarity on the government’s Job Retention Scheme, which will see the state pay 80% of the wages of workers furloughed due to the virus. Some legal aid firms feared they may not qualify because they receive public money, However, following talks with the Ministry of Justice the Society has assured them they can furlough workers on these terms.
The Society is to produce guidance on the Job Retention Scheme, and the Self-Employed Income Support Scheme when there is further clarity from HMRC on how the latter will operate.
In Wales, meanwhile, law firms are being steered toward several Wales-specific grants now available. These include Grant 1 – £25,000 – Retail, leisure and hospitality businesses with a rateable value between £12,001 and £51,000; and Grant 2 – £10,000 – all businesses currently eligible for Small Business Rates Relief (those with a rateable value up to £12,000).
*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.