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Holland & Knight Cuts Associate Pay an Average of 7 Percent
Daily Business Review
July 31, 2009
Holland & Knight is cutting associate pay an average of 7 percent, and as many as 50 South Florida associates could lose as much as 10 percent.
"The legal profession has experienced a significant decline in demand for services during the past year. In response to these changing market conditions, law firms have been forced to manage more carefully all of their expenses," managing partner Steven Sonberg wrote in a statement outlining the cutbacks. "Like many other firms, Holland & Knight is reducing the base salaries of its associates, with limited exceptions."
Pay cuts will not be uniform across the board but will range from 0 percent to 10 percent. The base salaries of some senior counsel and other staff also will be reduced by an undisclosed amount, Sonberg wrote.
The firm also plans to modify the overall associate compensation plan next year, with a formal announcement coming later this year. Major law firms have been inching away from lockstep associate pay raises to merit-based pay.
Holland & Knight's South Florida offices showed drops of 6.9 percent in gross revenue and 8.6 percent in revenue per lawyer last year as profit per equity partner grew by 3.5 percent. The firm ordered two rounds of layoffs -- 243 attorney and staff jobs in February and 70 staff jobs in May 2008.
The firm is listed 44th by revenue in an American Lawyer magazine survey of the nation's largest law firms and employs more than 1,000 lawyers worldwide, including 200 equity partners. It reported more than $600 million in gross revenue last year, which translated into a reported $590,000 in revenue per lawyer.
The pay cuts are the latest sign of belt tightening in a legal industry that is seeking to become more efficient as revenues ease. Almost 3,000 associates were laid off by dozens of Am Law 200 firms since January 2008. Major firms also have cut expenses, deferred new associate start dates and cut back summer associate programs as the recession took hold.
Several firms with strong South Florida presences have opted for associate pay cuts.
Miami-based Akerman Senterfitt Chairman Andrew Smulian announced by e-mail last week that the firm was cutting associate pay by 10 percent to prevent job cuts. The firm also said it was shifting away from lockstep raises and plans to implement a merit-based compensation system.
Fort Lauderdale-based Ruden McClosky imposed a 9 percent pay cut last month on associates and non-equity partners and informed its equity partners that they are not likely to receive 18 percent holdbacks.
All the cuts are being made in response to a difficult economy, which has resulted in slower-paying clients, more clients demanding discounts and declining demand for legal services.
