Baker Donelson Keeps Pay Cut But Lets Attys Earn It Back

By Xiumei Dong
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Law360 (September 15, 2020, 8:35 PM EDT) -- Baker Donelson Bearman Caldwell & Berkowitz PC has "partially" reversed salary reductions for attorneys and staff, the firm told Law360 Tuesday, and confirmed a measure that will allow associates to earn back their previous salaries through extra workload and hours.

The Huntsville, Tennessee-born law firm announced its austerity measures on April 1, including imposing temporary pay cuts and furloughing employees.

"Given our strong performance through the pandemic, and based on the work of the entire team of attorneys, paralegals and staff, we have already partially reversed those salary reductions," the firm said in a statement. "And our expectation continues to be that we will eventually get back to 100 percent pay for all employees, including our associates."

Baker Donelson declined to say how far it had rolled back the also-undisclosed salary cuts. However, the firm did confirm the authenticity of a confidential memo that was shared with the legal blog Above The Law this week that offered several ways for associates and staff attorneys to earn back their pay.

"While we can confirm the authenticity of the portion of the confidential memo that was shared, we do not agree with the characterization of its content," the firm said of the Above the Law story, which characterized the pay benchmarks as difficult to reach.

According to the memo, associates and staff attorneys can earn a one-time bonus that will bring their total compensation back to 100% if they exceed 125% of their revenue plan and 90% of their hours target by Sept. 30. Similarly, those who achieve at least 110% of their revenue goal and 90% of their hours will be able to bring their compensation to 90% of base pay, and 85% compensation will be restored for attorneys that exceed 100% of revenue plan and 90% of their hours.

Additionally, attorneys that achieved at least 110% of their hours target but have not exceeded one of the pay thresholds will receive a one-time payment that will bring their compensation to 90% of base pay, the memo said.

Associates and staff attorneys that are qualified will receive their payment on Oct. 15. Before that, the firm had already increased the base salary to 90% for associates and staff attorneys exceeding 90% of their revenue plan and hours target last month.

"The board finance committee wants nothing more than to get everyone back to 100% of pay," the memo said. "At this time, no one will be paid 100% of their salary prospectively. The finance committee has an obligation to balance the needs of our employees against the long-term financial health of the firm, and since we can't forecast what the next six months will bring, we made the best decision that we can."

Other firms have also rolled back austerity measures put into place earlier this year when many firms cut both salaries and staff due to the pandemic and associated economic upheaval.

Also, on Tuesday, Squire Patton Boggs LLP and Duane Morris LLP both confirmed they will roll back salary reductions for lawyers and staff. Squire Patton is restoring associate salaries to their prepandemic levels and reducing base salary cuts for support staff and other nonpartners to half, while Duane Morris said it had already reserved the compensation for nonpartner attorneys and staff to their pre-COVID-19 amounts at the beginning of the month.

On Monday, Mayer Brown LLP and Norton Rose Fulbright's U.S. offices confirmed that they will end pay reductions for both lawyers and staff by the end of the month.

In addition to restoring the salaries, Squire Patton added that it will reward employees "who performed at extraordinary levels" during the reduced compensation period with a special bonus. Mayer Brown also said it will award an additional discretionary bonus this year to high-performing income partners, of counsel and associates.

--Editing by Brian Baresch.

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

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