Law Firms

The good and bad news: Firms continue to announce cuts, but it's at slower pace

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More law firms announced pay cuts, layoffs and furloughs this week, but the pace is slowing. Since the ABA Journal reported on such measures last Thursday, at least eight more law firms gave staff members and lawyers bad news.

The number of large and midsize firms making similar announcements was at least a dozen in the week ending April 30, at least 15 in the week ending April 23, at least 19 in the week ending April 16, at least 12 in the week ending April 9, and at least nine in the week ending April 2.

Some law firms made more than one list, as they took some steps early on and additional steps later.

Among the questions vexing law firms cutting costs are how to deal with partners recently recruited with the help of a guaranteed pay package, Bloomberg Law reports. In many cases, lateral partner compensation is protected for at least two years after coming on board.

Cutting compensation for these partners isn’t as much as a problem when the lateral deal promises an incoming partner a place on the firm’s tiered point system, according to Bloomberg. It’s more problematic when lawyers receive a minimum salary guarantee. The guarantee can be higher than $10 million for some superstars.

Many firms are asking laterals with guarantees whether they would like to share in the pain. Even if a law firm cuts compensation without acquiescence, it could harm laterals if they sue to get their guaranteed amount, according to Tom Clay, a principal at consultancy Altman Weil who spoke with Bloomberg.

“You can sue your current law firm, I suppose, but then what are you going to do?” Clay said. “Go to another law firm? You’d be anathema, absolutely anathema to another law firm.”

Larger law firms that took temporary steps in the last week to cut expenses include:

• Dickinson Wright, which adopted a “tiered contingency plan” that includes a reduction in workforce of 3%. Tipsters told Above the Law that staff layoffs have begun. (Above the Law,

• Hogan Lovells, which cut equity partner draws by 15% to 25%; cut base compensation by 15% for nonequity partners and highly compensated counsels and specialists; and cut pay for associates and other nonpartner attorneys by 10%. Lawyers earning less than $100,000 won’t be affected. Equity partners will also defer half of any profits for the first quarter. (Above the Law,, Law360)

• Locke Lord, which reportedly cut associate pay by 10% and furloughed some staffers. The information came from Above the Law tipsters and was not immediately confirmed by the law firm. (Above the Law)

• Mayer Brown, which has cut pay by 15% for nonequity lawyers and business services staff making more than $200,000. Other staff members will see pay reductions based on a graduated scale. Lawyers and staff members can opt to take up to 12 weeks of voluntary leave, during which time they will be paid 25% of their salary. Those who handle pro bono matters during their leave will receive 35% of salary. The firm previously reduced monthly draws for equity partners by 20% and suspended their distributions for the first half of 2020. The firm has created a fund to help employees who have suffered “undue economic hardship.” (Above the Law, Law360,

• Nixon Peabody, which cut associate pay by 10% and made similar cuts for counsels. The firm also confirmed that it previously furloughed 5% of associates, laid off 5% of associates, and furloughed 25% of staff members. (, Law360, Above the Law)

• Pillsbury Winthrop Shaw Pittman, which has cut partner draws by at least 25%, compensation for associates and counsels by 20%, and pay for staff members by 10% to 15%. Staff members making less than $75,000 won’t be affected. Chief officers will take higher pay cuts. (Above the Law,, Law360)

• Squire Patton Boggs, which is cutting partner distributions, associate pay by 20%, and staff member pay by 10% to 20%. Some employees will be furloughed if they are underutilized or if they can’t work remotely. (Above the Law,, Law360)

• Vedder Price, which says it reduced shareholder draws by 20% and “reduced our workforce by 4% in areas where utilization was most impacted by the remote work environment.” (Above the Law, Law360)

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