Baker Botts Cuts Pay Due to COVID-19 But Avoids Layoffs or Furloughs
The firm announced austerity measures on Monday that affect lawyers and staff making more than $70,000, and delay new associates' start date.
April 27, 2020 at 12:59 PM
3 minute read
The original version of this story was published on Texas Lawyer
Baker Botts. (Photo: Jason Doiy/ALM)
To deal with the economic effects of the COVID-19 pandemic, Baker Botts will impose temporary pay cuts May 1 for lawyers and staff making more than $70,000. The firm is also delaying the start date for new associates to 2021.
The Am Law 100 firm's austerity measures do not include furloughs or layoffs, unlike plans announced by many large law firms in the wake of the economic downturn.
In a statement, managing partner John Martin said the "unprecedented financial strain" on clients and the global economy due to the pandemic, "has prompted us to make the difficult but necessary decision to reduce salaries temporarily, with greater reductions at higher levels, to protect our firm, retain our extraordinarily talented team, and preserve the income of our most vulnerable employees."
Martin sent an email to the firm Monday detailing the cuts. In the email, which was obtained by Law.com, he wrote that partners have agreed to compensation reductions "to absorb the bulk of the financial impact."
But, for a three-month period beginning May 1, the firm will also reduce salaries by 20% to 30% for counsel, based on their salary level, 20% for associates, and up to 25% for staff.
The temporary pay cuts will not affect any employee making less than $70,000 a year.
By July 31, the firm will determine the "appropriate course forward."
In the meantime, according to the email, the firm will potentially award interim bonuses to exceptional contributors, based on both individual performance and economic and firm conditions.
"Associate and counsel eligibility will be determined based on contributions to our clients and firm, including both utilization and exemplary client service," Martin wrote in the email.
The email did not provide a start date in 2021 for the incoming associates, and no further details were available from the firm.
Earlier this year, the firm announced its plans to defer the start of its 2020 summer program by at least a month, but said it would extend offers to all summer associates, contingent on maintaining strong academic performance.
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Pay Cuts, Layoffs, and More: How Law Firms Are Managing the Pandemic
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