DLA Piper Withholds Partner Compensation

By Tina Peng

Law360, New York (October 22, 2009) -- DLA Piper is reportedly among the major law firms in the United Kingdom that have held back partner profit distributions as a result of the recession.

The firm held back its August distribution and has yet to make a decision regarding the distribution due in November, according to Legal Week. In 2005, it changed its system to pay partners' quarterly distributions only if billing targets are reached on a firmwide, group and individual level, although monthly distributions have continued, Legal Week reported.

A DLA Piper representative in New York said the Legal Week report applied only to DLA Piper's international offices. A London-based DLA Piper representative could not immediately be reached for comment.

Earlier in October, Dorsey & Whitney LLP confirmed that it was moving away from a lockstep compensation system for its associates in favor of a system that puts greater emphasis on merit.

A representative for Dorsey & Whitney said Monday that effective Jan. 1, the firm’s associate compensation system would be adjusted to make merit-based elements a more significant part of compensation.

Despite rumors on legal blog Above the Law that the firm could slash associate base pay by between 25 and 30 percent, the representative said only 5 percent of the firm’s associates would see a reduction in 2010 from their current compensation level.

In June, Dorsey & Whitney cut 55 staff members, 38 of them in the firm's largest office in Minneapolis. Those laid off were mostly secretaries and assistants, along with some information technology and marketing staffers.

In addition, the firm confirmed at the time that it had instituted a 10 percent pay cut for all nonpartner attorneys, effective immediately. The representative attributed both the layoffs and salary cuts to economic conditions that have reduced the demand for legal services.

Abandoning the lockstep system is the trend du jour for firms looking to curtail spending and reward individual attorneys for hard work.

Intellectual property law firm Townsend and Townsend and Crew LLP recently told associates that it plans to cut salaries in 2010 — starting first-years at $145,000 — and that by 2011, it would launch a merit-based pay scheme, according to an internal memo posted by Above the Law.

And earlier in September, Fulbright & Jaworski LLP reportedly did away with a lockstep advancement program for associates in favor of competency-based programs, according to an internal e-mail cited by Above the Law.

In July, Morgan Lewis & Bockius LLP said it was eliminating lockstep compensation in favor of a system that was more closely linked to performance, experience and competency.

It was one of several moves the firm made as it continued adjusting staffing and compensation models to address client demands, a spokesman told Law360 at the time.

--Additional reporting by Julie Zeveloff and Elaine Meyer