Orrick, K&L Gates Latest To End COVID-19 Salary Cuts

By Xiumei Dong
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Law360 (September 24, 2020, 5:11 PM EDT) -- Orrick Herrington & Sutcliffe LLP and K&L Gates LLP confirmed Thursday that they are eliminating the salary reductions implemented earlier this year, joining several other BigLaw firms to roll back austerity measures after months weathering the coronavirus pandemic.

Orrick told Law360 in a statement that it will fully restore base salaries to pre-COVID-19 levels for all associates, of counsel and staff starting Oct. 1 and will continue to offer associates annual bonuses matching its 2019 scale.

"Our entire team has worked very hard to support our clients throughout 2020 and deliver extraordinary results for them," Orrick Chairman Mitch Zuklie said in a statement. "We put a variety of cost management measures in place in March, at a time of uncertainty regarding how 2020 would unfold, in order to give us flexibility. It's time to reverse some of that, express our gratitude to our associates and staff and recognize their relentless hard work."

The San Francisco-based law firm in April implemented 1% to 15% reductions in associate and staff paychecks, while partners, of counsel and executive staff saw "deeper" cuts. In addition to the salary reductions, the firm also reduced hours for some staff and postponed the start of its 2020 associate class to January 2021 or later.

In Thursday's statement, Orrick said it will change the work schedule for affected staff back to full-time. Adjustments will also be made to the firm's European and Asian offices, including conducting postponed 2020 staff reviews, it added.

K&L Gates' announcement comes just a month after the firm partially rolled back its coronavirus-related pay cuts after seeing better-than-expected performance during the pandemic.

In a memo to the firm's employees on Wednesday, K&L Gates said that it will completely roll back those salary reductions for attorneys and staff, saying it had "performed well under the challenging circumstances" under Covid-19.

In the internal email obtained by Law360 Thursday, K&L Gates global managing partner James Segerdahl said the firm is discontinuing salary reductions entirely for all affected professionals, associates and income partners starting Oct. 16. The reductions in the provisional advances made to equity partners will stop with the advances scheduled for the end of October.

"We believe that the combination of results so far this year and our best judgment regarding forward looking prospects, even with the significant uncertainties and risks that remain, allow us prudently to take this step," Segerdahl said in the email. "As we transition back to individualized, merit-based compensation decisions on our ordinary schedules, we certainly will not forget the contributions of those who have made extraordinary contributions over the course of 2020."

K&L Gates announced its salary cuts in April, saying that it will temporarily cut pay by 15% for its attorneys and staff making more than $75,000 annually at the beginning of the following month. Equity partners were also to see a 20% reduction in their scheduled advances, with the cuts to be revisited on a regular basis as the year progressed, the firm said at the time.

Such cuts were in line with others seen in the legal industry during the early days of the COVID-19 pandemic and associated economic upheaval. In addition to reversing the austerity measures, a small but growing list of law firms, including Davis Polk & Wardwell LLP and Milbank LLP and Cooley LLP, have begun giving out special pandemic-related bonuses to associates. New York-based law firms Debevoise & Plimpton LLP and Sullivan & Cromwell LLP said they would match the bonuses scale set forth by Davis Polk, offering U.S. associates extra cash awards of up to $40,000.

Simpson Thacher & Bartlett LLP and U.K.-based law firm Freshfields Bruckhaus Deringer LLP also entered the fray this week, rolling out special fall bonuses to their U.S associates, according to the legal blog Above the Law.

--Additional reporting by Kevin Penton. Editing by Alanna Weissman.

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

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