Wave Of BigLaw Pay Cuts, Furloughs Hits At Least 10 Firms

By Aebra Coe
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Law360 (April 8, 2020, 2:38 PM EDT) -- News flooded in Wednesday of at least 10 more large law firms implementing cost-cutting measures, such as furloughing staff or cutting attorney pay, as firms attempt to weather the economic downturn caused by the COVID-19 pandemic.

Linklaters said Wednesday that it will not be paying its next partner distribution, one of many cost-cutting moves announced by large law firms as they grapple with the coronavirus pandemic. (Getty)

Among the firms that have made announcements that became public Wednesday are Bryan Cave Leighton Paisner, DLA Piper, Orrick Herrington & Sutcliffe LLP, Nixon Peabody LLP, Shook Hardy & Bacon LLP, Ice Miller LLP, Eversheds Sutherland, Linklaters LLP, Lowenstein Sandler LLP and Taylor Wessing LLP.

Bryan Cave said in a statement it is proposing a 15% salary reduction for all employees making more than $40,000 across all offices for a 13-week period starting in May. The firm is also deferring a portion of partner pay distributions "in the coming months," and is offering attorneys and staff the option to take sabbaticals on 30% pay or to opt in to part-time work arrangements.

"BCLP posted strong financial results for the first quarter of this year, with revenues and productivity up on the prior year and budget for the current year. Many practice areas across the globe remain busy. However, we cannot be complacent and our responsibility is to look forward, rather than backwards," Bryan Cave co-chairs Lisa Mayhew and Steve Baumer said in the statement.

"We are taking these prudent measures to protect jobs and better position our firm from a financial perspective to address the likely challenges that will arise in the coming months, the scope and duration of which are uncertain at this point in time," they added.

A spokesman for Linklaters said the firm's senior partner Charlie Jacobs and firmwide managing partner Gideon Moore sent out a firmwide video Wednesday announcing the firm will not be paying its next partner distribution, which is due in June.

Additionally, bonuses will be awarded in two payments rather than one, and the usual salary review process will be moved back six months, Jacobs and Moore said. The firm does not plan to make any redundancies, they said.

The two leaders assured viewers that the law firm is resilient and continuing to serve clients globally to high standards despite the exceptionally challenging environment, the spokesman said.

A spokesman for New Jersey-based Lowenstein Sandler said the firm has paused partner distributions in response to the precarious economic situation.

"Given our strong performance in the first quarter of 2020 (March was our second strongest month in the past two years), we were in position to make a substantial additional distribution to our partners at the end of March; however, to ensure our firm's continued financial strength in the face of the uncertainty posed by the coronavirus, our executive board determined that prudence dictated we hold back those funds until we know more," Chief Marketing Officer Kevin Iredell told Law360 in an email.

Law360 also learned that Orrick is implementing a number of cost-cutting measures, including pay cuts for associates and of counsel of between 5% and 15% for the remainder of the year and "deeper cuts" for partners and executive staff, in addition to salary reductions for staff members.

And a letter shared with Law360 that Ice Miller chief managing partner Steve Humke sent to attorneys and staff shows the firm is furloughing 18 professional staff and 17 timekeepers. The firm is also reducing compensation for all team members who make more than $50,000 a year, on a sliding scale, with partners seeing the greatest reductions.

"Our intention is to raise all team members back to their regular compensation levels as soon as market forces allow," Humke said in the letter. "We believe that the compensation adjustments are necessary in order to protect the operating capital of the law firm and preserve jobs, while remaining a strong business partner for our clients."

Meanwhile, U.K.-based publication Legal Week has reported changes at Eversheds Sutherland, DLA Piper and Taylor Wessing.

Eversheds Sutherland International has furloughed 39 staff members and delayed bonus reviews, DLA Piper has furloughed U.K. staff and deferred bonus payments and salary reviews, and Taylor Wessing is pausing partner profit distributions and furloughing staff members, Legal Week reported.

And legal blog Above the Law reported Wednesday that 5% of Nixon Peabody's associates have been furloughed and another 5% have been laid off, while Shook Hardy & Bacon has instituted pay cuts for partners, associates and professional staff, ranging from 20% up to 90%.

Wednesday's news followed a week full of firms announcing similar cost-cutting measures aimed at weathering the COVID-19 crisis.

According to reports on Tuesday, Blank Rome LLP is planning to temporarily reduce compensation across the firm by 15%, Winston & Strawn LLP is reducing partner pay distributions, and Brown Rudnick LLP is implementing furloughs and pay cuts among associates and staff.

Pittsburgh-based firm Eckert Seamans Cherin & Mellott LLC confirmed Friday that it was furloughing a portion of its administrative and support staff without pay.

On April 1, Baker Donelson Bearman Caldwell & Berkowitz PC announced it was planning to impose a salary reduction for shareholders and other staff and that it would also be furloughing an unspecified number of employees.

Pryor Cashman LLP confirmed on March 31 that it was furloughing some associates, and Womble Bond Dickinson said it would be implementing both layoffs and furloughs for some of its employees. Cadwalader Wickersham & Taft LLP said it was pausing partner compensation distributions and reducing associate and senior administrative staff pay by 25%.

--Additional reporting by Matt Fair. Editing by Marygrace Murphy.

Update: This story has been updated with additional information about law firm cost-cutting measures.

For a reprint of this article, please contact reprints@law360.com.

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