Orrick Cuts Salaries, Delays First-Year Associate Start Dates

By Xiumei Dong
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Law360 (April 8, 2020, 10:08 PM EDT) -- Orrick Herrington & Sutcliffe LLP is implementing a graduated salary reduction for all employees as the firm grapples with the uncertainty around the COVID-19 pandemic, a move designed to save more jobs in the future, the firm confirmed Wednesday.

San Francisco-based Orrick is cutting pay as a result of the coronavirus pandemic, with the most senior firm members taking the biggest hit. In photo, a woman wears a mask with the San Francisco skyline behind her. (AP)

From April 16 through the end of the year, all associates and staff at the San Francisco-based law firm will see 1% to 15% reductions in their paychecks, while partners, of counsel and executive staff will receive "deeper" cuts, according to a source close to the firm.

The firm has also postponed the start of its 2020 associate class to January 2021, or after postponed bar exams.

"We have not yet felt the full impact of this crisis, nor do we know how soon the global economy will recover. So, it is prudent to take actions now designed to give our firm the flexibility to protect jobs and provide our people with health benefits for themselves and their families," Orrick Chairman Mitch Zuklie said in a statement confirming the changes.

According to the source, the reductions will follow a graduated scale, in which career associates will get a 5% pay cut, associates a 10% cut, and managing and senior associates and of counsel will see reductions of 15%. On the staff side, junior employees will see salary cuts as low as 1%, while more senior staff members could see that increase to up to 15%.

In addition to the salary reductions, Orrick is moving a "small percentage of staff" to a reduced work schedule from May 1 through September, the source said. Secretaries will work on an 80% or four-day-a-week schedule, which translates to salary cuts between 7% and 17% — although the vast majority will see cuts of 15% or less.

The source said the firm is offering its lawyers and staff the ability to work a reduced schedule if needed to handle family responsibilities during the pandemic. It is also offering special "make whole" awards to top contributors, no matter their role, which will be separate from annual bonuses, according to the source.

All associates and staff in the U.S. received 2019 bonuses and 2020 salary increases and promotions before the other measures were implemented, the firm said.

"Our program is structured to retain our extraordinary team so we can serve our clients and innovate — now and in the future," Zuklie said in the statement. "And, as a demonstration that we are in this together as one team, our most senior team members will make the greatest sacrifices."

To minimize its summer associates' travel during the pandemic, Orrick will conduct its 2020 summer associate program virtually and shorten the program's length to five weeks. According to Jolie Goldstein, the firm's chief communications officer, the summer associate program is set to start June 15.

"We are thinking of some virtual social events. We will do virtual training," Goldstein said. "All that said ... this won't be the same."

To make up for it, Orrick is giving permanent offers now to second-year law students to return to the firm as associates after graduation, and is giving current first-year students offers to return to the firm next summer, according to Goldstein.

Orrick is the latest to join a growing list of firms imposing temporary pay cuts and other cost-saving measures in the midst of COVID-19. Also on Wednesday, at least nine other firms confirmed they are implementing cost-cutting measures. 

--Additional reporting by Aebra Coe. Editing by Breda Lund.

Update: This article has been updated to include information about bonuses paid by Orrick.

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

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