Law Firms

At least 19 more law firms cut pay and furlough employees; will partners ultimately benefit?

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More and more law firms are cutting salaries, reducing partner compensation, and furloughing or laying off employees because of the novel coronavirus. Since the ABA Journal’s story last Thursday on the trend, at least 19 additional large and midsized law firms have taken temporary measures to reduce costs because of financial uncertainty created by the COVID-19 pandemic.

One of the biggest pay cuts is being implemented by Schiff Hardin, which says it is temporarily cutting pay by up to 50% for 6% of its lawyers “based on anticipated demand,” according to Above the Law and

Most lawyers, however, will see pay cuts of 15%. Pay for staff members who make more than $100,000 will be cut by up to 15%, and a small number of staff will be laid off.

At Greenspoon Marder, layoffs hit lawyers and staff members, report and Law360. The firm confirmed that it laid off five lawyers and 40 staff members and also said it cut staff salaries.

Sheppard Mullin lawyers are personally helping 33 staff members who have been furloughed because they can’t perform their jobs from home, report Above the Law, and Law360. The law firm is paying the furloughed employees’ medical benefits, with no need for the employees to contribute.

In addition, partners and senior management have personally contributed to a “bridge fund” to provide full-equivalent take-home pay for the employees before their unemployment benefits kick in. “These bridge funds are a grant, not a loan, and will not be paid back,” the law firm said in a statement.

Baker McKenzie, on the other hand, is creating an emergency loan fund for those who are experiencing extreme hardships, according to Above the Law, and Law360.

The law firm has cut pay by 15% for lawyers, timekeepers and business professionals. No one making less than $100,000 will be affected, and no one’s pay will be reduced below that threshold. Equity partners will see the largest compensation impacts, the firm said.

At last count, Above the Law and each listed more than 50 law firms total on their furlough and pay cut trackers.

Bloomberg Law points out that equity partners seeing reduced compensation today could end up benefiting in the long run from cuts to associate pay. At least half of equity partner compensation comes in a share of law firm profits, according to Bloomberg Law.

“Firms making decisions to cut salaries today don’t know what their profits will be at the end of the year,” the article says. “And cutting expenses in the form of salaries will have the effect of increasing the end-of-year profit pie—which equity partners will still divvy up. … If a law firm’s revenue projection doesn’t fall as far as leadership anticipates when announcing today’s salary cuts, and partners don’t end up taking a bigger hit than associates, will the law firm retroactively keep its promise to associates?”

Still, law firms have to make cuts to make sure they can stay afloat, said Bruce MacEwen, a partner at Adam Smith, in a Bloomberg Law interview.

“What I would focus on if I were a managing partner is cash. Because when you run out of cash, the game is over,” MacEwen said. “And a big cash expense that is variable in the short-term is compensation and salary. So you almost have no choice but to look at that.”

Above the Law, and Law360 have published several stories on law firms that have taken temporary steps to cut expenses in the last week. The firms include:

• Goodwin Procter, which has laid off some members on its global operations team. (Above the Law, Law360)

• Fisher Phillips, which cut pay by 20% for lawyers and staff. (Above the Law)

• Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, which is cutting staff and paraprofessional salaries by 5% for those making more than $75,000, cutting associate pay by 10%, cutting equity partner payouts by 10%, and cutting nonequity partner payouts by 5%. (Above the Law, Law360,

• Kilpatrick Townsend & Stockton, which is cutting partner draws by 10%, cutting associate pay by 5%, cutting the pay of salaried staff members by 5%, and furloughing employees who can’t work remotely. Secretaries, who are paid on an hourly basis, will have their work time cut by 20%. (Above the Law,

• Smith, Gambrell & Russell, which has cut pay by 10% for all employees, including associates, and deferred partner draws by 20%. (

• Kelley Drye & Warren, which is cutting pay by 10% for lawyers and other employees making more than $100,000 per year; no one’s pay will be cut to less than $100,000. Equity partner draws will be reduced by up to 20%. (Above the Law, Law360)

• Ballard Spahr, which cut pay by 15% for nonpartner employees making more than $250,000 and by 10% for those making between $75,000 and $250,000. Partner draws will be reduced by up to 25%. (Above the Law, Law360)

• Faegre Drinker Biddle & Reath, which has deferred equity partner distributions by one-third for the second quarter. (

• Duane Morris, which has reportedly cut associate and special counsel salaries by 15% and eliminated its 401(k) match. The firm will assess whether it can return some of the pay if it outperforms its financial projections. The firm has also furloughed a limited number of administrative staff who can’t work remotely, although their medical insurance will be fully paid by the law firm. The firm will also defer this month’s distributions to equity partners. (Above the Law, the Philadelphia Business Journal)

• Pepper Hamilton, which is reducing distributions to equity partners and furloughing some support staff who can’t work remotely. (Philadelphia Business Journal)

• Hinshaw & Culbertson, which is reportedly cutting pay by 15% for those making more than $55,000. (Above the Law)

• Ogletree Deakins, which has reduced the hours of some employees and put others on unpaid leave. Affected employees will get two weeks of special COVID-19 pay from the firm and will be able to use available paid leave when that runs out. The firm will pay for health insurance for those on unpaid leave. (Above the Law, Law360)

• Crowell & Moring, which will cut pay by 15% for associates and counsels and by 20% for income partners. Professional staff members will see pay cuts ranging from 5% to 25%, although those making less than $100,000 won’t be affected. The firm will cut compensation for equity partners by 25%. (, Above the Law, Law360)

• Reed Smith, which is cutting pay by 15% for associates for about four months and by 10% for counsels for three months. The firm had previously reduced partner distributions. (Above the Law)

• Fragomen, which is cutting pay for all partners and “C-suite corporate leaders” by an undisclosed amount. The firm is also suspending matching contributions to its 401(k) plan. (Above the Law)

The ABA Journal reported on prior furloughs and pay cuts here and here.

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