UK markets close in 3 hours 54 minutes

Coronavirus clampdown prompts British professional services to cut costs

By Huw Jones
A usually crowded Canary Wharf is seen at lunchtime in London

By Huw Jones

LONDON (Reuters) - Britain's coronavirus lockdown began taking its toll on London's financial heartland on Tuesday as accounting and consulting group Grant Thornton and law firm Allen & Overy sought to cut costs, including pay, and bolster capital.

Professional services in the City of London have hit a near standstill since the coronavirus pandemic shook global markets and caused normal activities like mergers and acquisitions and stock listings to dry up.

In normal circumstances Grant Thornton and Allen & Overy advise banks and other financial firms on takeovers, property and other transactions and initial public offerings (IPOs).

But while A&O, one of the "magic circle" group of law firms, said it was in a "very strong financial position", it had decided it was sensible to introduce "prudent" measures.

"These include adjustments to the phasing of profit distribution to partners, increasing partner capital levels, deferring certain investments and recruitment, and cancelling events," A&O said in a statement.

A&O said it would still award bonuses for this financial year, but split between the normal payment date in July and October's payroll.

"For staff, including fee earners and business support staff, we have decided not to undertake annual salary reviews in the first quarter of the forthcoming financial year."

Grant Thornton, which is also an auditor, said in a statement it was a difficult time for its employees, especially for those who have caring responsibilities.

"We have offered all our employees the opportunity to volunteer for a temporary reduction in their contractual hours or a short-term sabbatical," it said in a statement.

"These are clearly exceptional times and these voluntary measures help us to support our people while also continuing to support our clients," Grant Thornton added.

Richard Fox, employment partner at Kingsley Napley law firm, said all firms need to be realistic and take sensible moves as taking such decisions early might save pain later.

"Not all businesses will find furloughing staff attractive, particularly if they want to make use of those employee's services," Fox said.

"Many employers are considering a broader range of options and offering salary cuts for reduced hours or leave of absence arrangements for the foreseeable period ahead are prudent alternatives," he added.

(Reporting by Huw Jones; Editing by Alexander Smith)