As reported by Lawyers Weekly’s sister brand, My Business, earlier this week, the JobKeeper payment will be lowered to $1,200 per fortnight from October, and those working under 20 hours pre-COVID will receive $750 instead of the $1,500 flat rate.

Moreover, as of the start of January until the end of March 2021, the payment will be lowered further to $1,000 and $650, respectively. The government also announced changes to eligibility for the scheme.

How boutique law firms should react

Responding to the government’s announcement, Kym Briese – the principal of Toowoomba-based Briese Lawyers – said that, undoubtedly, JobKeeper has been a “lifeline for any small business”, including law firms, that were adversely impacted by COVID-19 and the subsequent recession.

The announced extensions to the program, she surmised, should be welcomed, even if those extensions are at reduced levels.

“This is because it provides those firms with an opportunity to retain their small teams until at least the end of March 2021 and reduces the pressure to ensure there is work in the pipeline to cover the costs of business,” said Stoddart Legal director Sarah Stoddart, who is based in Brisbane.

Jacob Aldridge, an international business adviser, supported this, saying the decision to continue JobKeeper “on a phased withdrawal approach” should be welcomed by all, even if it doesn’t impact upon them personally.

VIEW ALL

“Compared with government initiatives in other countries like the USA and UK, JobKeeper has done an outstanding job at keeping people employed. Even on reduced hours this means individuals continue to add value to their employer and clients, boosting the broader economy, and JobKeeper will keep doing so with these changes,” he said.

However, Ms Stoddart added, “for those firms who may have seen a slight increase in their revenue in Q2 due to the reduced restrictions or from advising clients on issues associated with the pandemic and [government] support, the announcement is likely to be cause for concern.”

Issues and challenges on the horizon

Firms who may have previously qualified for the JobKeeper scheme, Ms Stoddart noted, and who have subsequently seen a temporary increase in revenue, “may now face the challenge of being unable to qualify for the payment as a result of not meeting the eligibility requirements/turnover test”, she said.

“Further, firms with [part-time] employees may find that the new ‘two-tier’ arrangement does not provide sufficient funding for [part-time] employees, resulting in pressure to pay wages or at worst, be forced to let staff go,” she outlined.

“As the [government]/ATO has not yet announced whether or not there will be alternative eligibility tests (as there was with the initial scheme), it is difficult to know at this stage whether these challenges can be overcome.”

For Mr Aldridge, this means that for boutique firms or sole practitioners who continue to qualify for JobKeeper, questions must be asked about their overall business practices and the long-term viability of their operation.

“Unless they were directly exposed or impacted by COVID-19 and the [recession] initiatives, for example firms specialising in retail or insolvency firms who have seen a decline in work because of zombie businesses, there’s no reason for a law firm to have seen a 30 per cent decline in revenue since the same quarter last year,” he explained.

“While a slightly lower injection of cash from the government may hurt, the continuation of the program should be treated as a final lifeline for those firms who rely on that money. Thankfully, they will no longer be facing a cliff in October, but the time to act is now.”

This all said, the reduced JobKeeper payments that have been announced “still represent a substantive contribution toward the wage bill in most practices”, Ms Briese stressed.

“Where some practice areas are still suffering from a downturn that is impacting the bottom line and might mean that the adjusted payment hits the employer, there is a window of time still available for employers to get creative about alternate revenue streams, reallocating team members to more viable practice areas in the [short-term] or have some planning discussions with team members about reduced hours and changed arrangements that reflect the lower payment and the employer’s capacity to supplement it. We have two months’ notice of the change, something COVID-19 didn’t afford us when it first impacted,” she said.

Inherent opportunities

Boutique law firms should come away from the announcement with more confidence, Ms Briese posited, given they now have this safety net in place for, potentially, an additional six months. This should help them, she said, plan ahead and better utilise their team to “tidy up precedents, put processes, marketing plans, [etc] in place so that as things change and the economy picks up, they are best placed to be more productive in the future”.

“This is an opportunity to crush those tasks that you never quite get around to. It’s also an opportunity to learn,” Ms Briese proclaimed.

“As business owners we know, in theory, that we should have a war chest and tuck away money to allow us to cover all expenses for a period of three months in case the worst happens. I think many have realised they did not have that and have historically been pretty complacent about having a continuous income stream. 2020 has shown us that we can’t afford to do that.”

It also, Mr Aldridge submitted, removes the need for such firms to act from fear of JobKeeper ending.

“The past few months have been an unexpected boon for many organisations who were prepared and, in a position, to benefit, and unless our COVID-19 second wave extends further I would expect those positive economic conditions to continue for longer,” he reflected.

“There are great opportunities in legal practice right now for building relationships and brand awareness, for recruiting quality staff, and improving your strategic capability as a business leader. Seizing these opportunities requires business partners to act with confidence, and not be overly cautious acting through fear.”

Ultimately, Ms Stoddart surmised, there is “no time like the present for boutiques to innovate and find creative ways to practice law differently. 

“The changes to the JobKeeper scheme and in particular, that the future payments will be based on actual rather than projected figures, [force] boutique firms to really look at their numbers. From looking at the numbers, boutique firms and sole practitioners might find opportunities to reduce costs, trim the fat from their firms and in doing so, achieve better financial viability,” she said.

“It is also a time for firms to consider how they can help their clients navigate the changes and in doing so, create space for new matters.”

Looking ahead

Turning his attention to the future, Mr Aldridge said he has “no doubt” that the worst of COVID-19 is yet to come.

“Governments around the world are inventing new approaches to fiscal policy in an attempt to keep economies afloat [amid] the worsening pandemic, but they are not in the business of picking winners and losers,” he mused.

“Whatever size your practice may be, the only person who can take responsibility for your ongoing success is you.”

However, as Ms Briese noted, even if there are looming setbacks and further restrictions, governmental assistance can and will make a difference.

“My practice has bounced back relatively quickly, after what was a very sudden loss of revenue. In my practice it was the conveyancing/commercial area that took the initial hit and that accounts for [one-third] of my team. Once Jobkeeper kicked in and Queensland started to ease restrictions, we saw consumer confidence return and work has steadily increased,” she said.

“That has been further helped by the announcement of the [building grants] by both [state and federal governments]. Hopefully that trajectory will continue, but it is comforting to know that if there are setbacks with further outbreaks and restrictions, that the opportunity to requalify for a further two quarters is available.”