As Pay Cuts and Furloughs Spread, These Atlanta Firms Remain Holdouts—for Now

As the shutdown from the novel coronavirus wears on, Atlanta law firm leaders are keeping a close eye on work levels, revenues and costs as they grapple with the need for painful cuts and weigh the fate of summer associate programs.

April will be a key month for these decisions. While a few large Atlanta-based firms instituted firmwide pay cuts earlier this month, many others, such as Alston & Bird, Eversheds Sutherland, Morris Manning & Martin and Troutman Sanders, have not made any pay cuts or furloughed anyone. Many firms are waiting to see how the next two weeks play out, assessing revenue and productivity for their partners and employees while they seek more clarity on when people can return to the workplace.

Alston & Bird, the city’s second-largest firm, is not making any furloughs or pay cuts at this time, said its chairman, Richard Hays, in an email late Wednesday. Atlanta’s largest firm, King & Spalding, has not announced any decisions on potential cost-cutting. King & Spalding’s chairman, Robert Hays, did not return a call from the Daily Report on that topic.

Many firms are still waiting to see how the situation develops, because they don’t want to make any cuts that they don’t have to, several law firm leaders said. The big question—still unknown—is how long the shutdown will last.

Eversheds Sutherland, for one, is carefully monitoring the situation. “We are looking at everything in terms of clients, our people and the external factors on a daily basis,” said its U.S. co-chair Mark Wasserman in a Wednesday email.

Morris Manning similarly said they are not making any pay cuts, layoffs or furloughs at this time.

“We have not instituted any layoffs, furloughs or reductions, but we are closely monitoring workloads, cash flow and expenses,” said Morris Manning’s managing partner, Simon Malko.

Troutman said in a statement that it “is taking a variety of steps to reduce expenses. At this time, none of those measures involve layoffs, involuntary leaves or reduced compensation.”

However, the firm this week offered its professional staff the option of taking a voluntary leave of absence, starting May 1. Employees electing to participate “will receive a weekly stipend plus paid health insurance premiums,” the statement said. They are also eligible for state unemployment benefits and the supplemental $600 per week federal stipend, a spokesperson said, adding that the firm will fully cover their health insurance.

The voluntary leaves are expected to be for three months, but Troutman “plans to call people back earlier, if circumstances allow,” the spokesperson said.

Troutman acknowledged that firms are operating in a fluid and fast-changing environment. “We will continue to monitor the economic impact of the COVID-19 virus and, if necessary, implement any future actions after careful consideration and with a measured approach,” it said in the statement.

Other big Atlanta general practice firms have already instituted temporary pay cuts, with their partners bearing the brunt. Kilpatrick Townsend & Stockton temporarily reduced partner draws by an average of 10%, effective April 7, and it will cut pay by 5% for other lawyers and staff, as of April 16. The firm has reduced work time for secretaries, who are hourly employees, by 20% as of April 20.

Smith Gambrell & Russell on April 1 deferred partner draws by 20% and cut pay for other lawyers and staff by 10%, but the firm’s chairman, Stephen Forte, told the Daily Report last week that it does not plan any layoffs or furloughs.

Summer Programs in Limbo

Firms including King & Spalding; Eversheds Sutherland; Kilpatrick; Smith Gambrell; and Morris Manning, are still deciding what to do about their summer associate programs, which ordinarily start in late May. Options include pushing back the start dates to late June or having a remote program.

Greater assurance on when offices can reopen will be critical, since hosting law students for a remote summer program is generally considered undesirable. Assuming there is a return to the workplace this summer, firms also are assessing the health risks of having law students from other locations come into their offices and how comfortable their own employees would be with that.

Alston & Bird has decided on dates for its program, which its chairman said in a Wednesday email will run from June 22 through the end of July. “We are delaying the start of the summer program in hopes of having people in office. We will see,” Hays said. “They needed to know something definitive for planning.”

King & Spalding has not yet made a decision on whether it’s canceling its program or starting later in the summer. “At this time we know any program will not start before June 22. For that reason, please do not make any travel or housing arrangements,” the firm told its summer associates in an email on Wednesday. “We will be in touch soon with additional details.”

Eversheds Sutherland also has not yet decided how to handle its program. “We have been in touch with our summer associates but have not yet made any final decisions about how we will run the program this year,” Wasserman said in an email.

Kilpatrick is planning to host a summer program, but “its format and structure are under review,” a spokesperson said.

Smith Gambrell is considering either a shorter four-to-six week program starting in June or early July–or a virtual program, Forte said, “although that seems less desirable given a remote work setting.”

Troutman decided last week to cancel its summer program because of the issues of working remotely at a time when the firm is preparing for its impending July 1 merger with Philadelphia-based Pepper Hamilton. Pepper canceled its program as well, and instead the two firms are offering the rising 3Ls in their programs full-time associate jobs for fall 2021.

Morris Manning has not canceled its summer program, but it is pushing back the start date, Malko said. “It’s going to depend on what happens in the next couple of weeks, so we’ve advised our summers that they need to be flexible,” he said, explaining that the firm wants to have an “in-person component” to the program.

The question, he added, is: “What is it going to look like when we go back to work?”

Depending on public health developments, Morris Manning is considering having its summers start their jobs in person at the firm and then possibly alternate working a week in the office with a week remotely, Malko said.

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Pay Cuts, Layoffs and More: How Law Firms Are Managing the Pandemic