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Chapman and Cutler Takes Harder Line on 'Underperformers,' May Reduce Salaries
The National Law Journal
April 10, 2009
Chapman and Cutler, a Chicago-based law firm with about 200 attorneys, is cutting more underperforming lawyers and may reduce salaries for all lawyers amid the recession.
To reduce expense, the firm has canceled its traditional May partners' retreat, shortened its summer associate program to eight from 10 weeks, eliminated its public relations budget and may reduce salaries, said Rick Cosgrove, the firm's chief executive partner.
While Chapman hasn't dismissed any lawyers purely for economic reasons, it has been "pruning" those lawyers considered "underperformers" more rigorously in light of less activity in some practice areas and a stronger talent pool available for hire, Cosgrove said. "Sometimes you make those decisions more quickly in a difficult environment."
Still, Chapman is not delaying the September start date for its incoming class of 10 first-year associates, said Cosgrove, who believes the commitment is an important one to honor. While his firm has been paying $160,000 to first-year associates, the firm may reduce the pay to $145,000. Cosgrove expects that most law firms eventually will cut associate salaries.
Law firms across the country have been chopping their attorney ranks -- especially associates -- and staff in light of the slowdown in real estate, financial services and transactional work. During the past two weeks, Reed Smith and Chicago-based Mayer Brown cut lawyers and staff in a second round of reductions, Baker & McKenzie dismissed lawyers and staff, Chicago-based Vedder Price eliminated lawyers and Washington, D.C.-based Hogan & Hartson cut staff.
Chapman gained attention in 2007 for starting a program in which third-year associates were allowed to choose between two career paths at the firm, one that offered lower pay coupled with fewer hours and another with higher pay and a busier work schedule. The firm considers the program successful, but has had to cut underperformers disproportionately from the lower-pay group, Cosgove said. "Many of the really high performers tend to be in that higher level," Cosgrove said.
The firm is in the midst of employee performance reviews and may shed more employees by early summer, said Cosgrove, who declined to say how many have been cut this year. Pay reductions may also be coming, at least for the firm's lawyers, he said.
"I expect there will be compensation reductions," Cosgrove said. "For staff, it's a harder decision."
Still, the firm is hiring in New York, where it opened an office with one partner in February. Cosgrove, who is based in Chicago, said he suspects that his firm's lower-cost structure will allow its lawyers to offer lower rates in the New York market. Chapman's other two offices are in San Francisco and Salt Lake City.
"We view this as an important investment in our future," he said. "You've got to continue to invest in the future."
