McKenna Long & Aldridge announced Tuesday that to address economic pressures and client concerns, it will reduce salaries for new associates from $145,000 to $125,000.
With 12 new associates set to start in the fall, the $20,000 cut should save the firm $240,000 -- plus money not spent on 25 summer associates, whose pay is based on first-year salaries.
The Daily Report's most recent survey said the firm grossed $263.9 million in 2008, with net income of $69.8 million, or $775,151 per partner.
McKenna's chairman, Jeffrey K. Haidet, sounded just as interested in satisfying clients upset at associate salary increases as in saving cash.
"They could not see that those salary increases were a rational decision, and they were concerned that that irrationality was being passed onto them," Haidet said.
Some McKenna clients had already responded to news about the pay cuts by sending messages such as "well done" and "that's a move in the right direction," said Haidet.
He noted that for the past two years, the firm has issued raised based on merit rather than years out of law school, he said.
"We didn't have to put in place firmwide salary freezes," Haidet said. "To me, that's the good side of a merit-based compensation system."
Some of the firm's 450 attorneys will be getting raises, others will not, he added.
All the new associates have been contacted, he added. "I won't say they're happy about a $20,000 pay cut, but I think they completely understood. They expressed that they're pleased we're honoring our offer and not pushing back their start date."
Haidet said the firm's changes were motivated in part by an initiative called the Value Challenge, started by the Association of Corporate Counsel. The in-house lawyers' group has been holding discussions with law firm and corporate attorneys to talk about how to align costs of legal services more closely with the value to clients.