Foley Hoag Embraces Pay Cuts, New Bonus System

By Julie Zeveloff

Law360, New York (October 29, 2009) -- Foley Hoag LLP has become the latest law firm to slash base salaries for associates, informing employees of the impending pay cuts as part of a strategic reform to improve attorney development.

A spokeswoman for Foley Hoag on Thursday confirmed the new compensation system, which also includes changes to the firm's bonus program.

In a memo obtained by Above the Law, Foley Hoag told attorneys that their base salaries could be cut by as much as 10 percent, effective Nov. 1.

Aggregate base salaries were reduced by less than 4 percent, and some attorneys received no reduction, the memo said.

"We have implemented a new compensation system effective Nov. 1, with an increased focus on lawyer professional development and individual contributions to our clients and to the firm,” Foley Hoag co-managing partner Bill Kolb said in a statement. “As a result of these changes, some of our associates will see a decrease in their base salaries.”

“Going forward, we expect that bonuses will become a more significant component of our attorneys' total compensation,” Kolb said. “The bonuses will reflect both qualitative and quantitative contributions that individual lawyers make to the overall success of our firm and service to our clients."

According to the memo, adjustments to associate base salaries for attorneys in the classes of 2006 to 2009 were made on a lockstep basis.

Base salaries for health policy specialists and lawyers in the class of 2005 and earlier were determined on a more individualized basis, taking into account factors such as practice-specific legal skills, productivity and market demand, the memo said.

In January, Foley Hoag laid off 6 percent of its lawyers and staff — around 30 people in total — citing economic conditions.

Earlier in October, Reed Smith LLP also said it planned to embrace a system that would more closely align competency and compensation.

On Tuesday, the firm revealed the global launch of its CareeRS program, which has been under development for the past 18 months and aims to counteract attrition by focusing on lawyer development, according to Nicola Dingemans, Reed Smith’s global chief people officer.

"We began the development of this program well ahead of the Lehman Brothers implosion," Dingemans said. "Talent and branding are a firm's two major assets, and we are committed to attracting, developing and retaining the best talent."

The program will initially be rolled out in two phases, first beginning with associates and then moving toward support staff sometime next year, Reed Smith said.

Under CareeRS, associates will be grouped according to skill levels, with the attorneys being designated as junior, midlevel or senior, according to the firm.

The competency model covers four key areas, including legal skills, citizenship, business skills and clients, with lawyers to be evaluated further on how they meet nine core competencies within these quadrants, the firm said.

Those competencies include mastery of fundamental legal skills, support of the firm's culture, and demonstration of leadership and business skills, according to Reed Smith.

--Additional reporting by Pete Brush and Anne Urda