Citing a "challenging business environment," Orrick, Herrington & Sutcliffe announced Monday it would freeze salaries for its nearly 670 associates.
In a memo distributed Monday, the firm announced that associates in the United States, Europe and Asia will receive the same salary in 2009 as they did this year. The move follows a similar announcement by Latham & Watkins earlier this month; Dorsey & Whitney has announced plans to follow the same route.
In the memo, Orrick Chairman Ralph Baxter says the decision is part of an effort by the firm to "adapt to the radically changed business environment in which we will operate in 2009."
"As we all know, the world economy is experiencing unprecedented volatility and uncertainty and it seems clear that these challenges will continue into the new year," Baxter says in the memo. "In these times, we must rethink our traditional way of doing things and adjust our approach to reflect the reality facing our industry and our clients. This includes reassessing our compensation policies at all levels of our firm."
The memo did not directly refer to what would happen to equity and nonequity partner compensation in 2009. But a spokesman says "of course partner compensation is affected by the firm's economic performance." In 2007, profits per partner at Orrick hit $1.66 million, up 16 percent.
Despite the salary freeze, Orrick told associates that it will still pay out 2008 bonuses in February as it previously promised. Associates learned in June that bonuses would range from $25,000 to $85,000.
The news comes at the close of what has become a harsh year for Orrick. The firm entered 2008 looking strong, having grossed $772 million in 2007, up 15.9 percent. But the collapse of the securitization market hit Orrick's structured finance practice hard, and the firm began cutting back on expenses.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.