Thompson Hine's Pay Cut Comes With Hourly Incentive to Recoup Lost $
Until the recent recession, the practice of cutting salaries to help a company’s bottom line was considered rare.
But cuts in lieu of more layoffs are likely to become more common. And the Wall Street Journal notes that law firms are no exception.
Its example is Cleveland-based Thompson Hine, which instituted a pay cut for the first time since the Great Depression. In February, the firm announced it was laying off 12 lawyers and 29 staff.
Then in March, some 200 associates and nonpartners were forced to take a $17,500 salary hit. (Starting salaries at the firm were in the low $100,000s.)
“This was an unusual and aggressive step,” David Hooker, the firm’s managing partner, tells the WSJ. “I was nervous [because] anytime you do something like this, it creates anxiety.”
But Thompson Hine offered a performance incentive that would allow some lawyers to recoup a portion of their pay cut. Those who bill 1,750 hours can recoup $7,500 of the lost pay, and those who bill 1,900 hours can recoup all of it, the WSJ reports.
One associate is quoted as saying that the pay cut news actually came as a relief on the heels of news elsewhere that large firms were making layoffs.
“The natural anxiety of the unknown was taken away,” says associate Jared Oakes.
