Hughes Hubbard lays off lawyers, staffers after receiving paycheck protection loan
Image from Shutterstock.com.
Hughes Hubbard & Reed has laid off some associates and staff members after receiving a paycheck protection loan from the federal government.
The law firm confirmed layoffs of “certain attorneys and staff” in a statement to Above the Law. The statement did not provide specifics.
Hughes Hubbard provided this statement to the ABA Journal: “We decided in the early stage of the pandemic to keep our entire team intact for as long as we could, hopeful for a swift economic recovery. We were one of the more than 100 firms that decided in the early stage of the pandemic to apply for the [paycheck protection program] and were approved based on the [Small Business Administration] criteria. That money was used for its intended purpose, to save jobs during the worst of the crisis.
“Now, more than three months into the pandemic, the deep impact of court closures and a slowdown in deal activity have given us a better-informed sense of the manner in which the pandemic has changed the way we do business. We, like other firms, have made some difficult decisions on staffing to address the current environment. We regret the hardship these steps cause as we and the industry evolve to meet this changing environment. We have confidence that the action we take today will enable us to serve our clients, to compete at the highest level and to deploy our people effectively.”
Hughes Hubbard is not the only law firm to lay off employees despite receiving a payroll protection loan.
Bremer Whyte Brown & O’Meara told Above the Law in April that 15% of its lawyers were furloughed or laid off and 20% of the staff was temporarily furloughed. Law360 has reported that the firm received a paycheck protection loan.
Schiff Hardin laid off a small number of staff members after receiving a loan. It also cut pay by up to 50% for 6% of its lawyers and cut pay by 15% for other lawyers and staff members making more than $100,000.
Law firms were eligible to participate in the paycheck protection program if they had less than 500 employees, Law.com reports.
Other firms taking employment actions that are participating in the paycheck protection program include:
• Curtis, Mallet-Prevost, Colt & Mosle, which reportedly cut associate salaries by 25%.
• Day Pitney, which reportedly cut pay by 15% for lawyers and staff members and also cut hours for some work-at-home employees.
• Ice Miller, which furloughed “35 professional staff and timekeepers” and cut pay on a sliding scale for those who make more than $50,000 per year.
• Kelley Drye & Warren, which cut pay by 10% for lawyers and other employees making more than $100,000 per year.
• Pryor Cashman, which furloughed some associates.
• Smith, Gambrell & Russell, which cut pay by 10% for associates and other employees.
• Stroock & Stroock & Lavan, which cut pay by 15% for lawyers and staff members, although salaries won’t be reduced to less than $75,000.
• Sullivan & Worcester, which furloughed some employees and cut pay for associates and those making more than $66,000 per year by 5%.
Paul Hastings partner Christopher Austin told Law.com that loan forgiveness is reduced when companies have “done a bunch of layoffs.”
Firms will have to pay back part of the money if their head count is less than the number reported when the loan was originated. The initial head count could be based on figures from the beginning of 2019 or 2020, which allowed firms to pick the lower number.
Loan forgiveness is also reduced if firms cut pay by more than 25% for people making less than $100,000.
Updated July 8 at 9:38 a.m. to add Schiff Hardin to the list and include information from Law.com.
ABAJournal.com: “Many law firms that applied for paycheck protection loans are still waiting; Texas lawyer sues”