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

Major law firms are adopting drastic measures to shore up their finances and mitigate the economic impacts of the coronavirus pandemic. We will continue to update the list below as the crisis continues. 

Allen & Overy

Allen & Overy has called for partners to contribute capital as it takes measures to protect itself financially. The Magic Circle firm is holding a cash call and is gradually reducing its partner profit distributions, it confirmed March 31. It has also frozen its associate and support staff pay, meaning it will not undertake annual salary reviews due to take place in the first quarter of the forthcoming financial year. Meanwhile, bonuses due to be paid to fee-earners and senior support staff in July will be split into two payments. Half will be paid in July, while the remaining half will be paid in October. The firm, which has no debt, has also deferred certain recruitment and cancelled several events, a spokesperson said in a statement.

Baker, Donelson, Bearman, Caldwell & Berkowitz

Baker Donelson has temporarily reduced draws and salaries for shareholders to weather the crisis. It announced April 1 it will make a further temporary pay cut firmwide. It will also furlough some employees “over the next few weeks,” according to a statement from the firm. A Baker Donelson spokesperson said in an email that the temporary salary reductions will be 20% across the board, and that the furloughs will affect “less than 4% of the firm’s overall workforce.”

Baker & McKenzie (Australia)

In Australia, Baker & McKenzie has so far made no cuts but instead has increased working flexibility for staff to help them manage their duties of caring for other members of their households, particularly for those with young children, given the closure of schools and day care centers and the demands of homeschooling. The voluntary options include the possibility of adjusted hours, reduced hours, and taking accrued carers or annual/long service leave.

Blank Rome

Blank Rome furloughed some staff, but has not done the same with any lawyers, the firm confirmed April 3.

Cadwalader, Wickersham & Taft

Cadwalader will stop paying partners, cut associate salaries by 25% and impose pay cuts of 10% to 25% on its staff in response to the coronavirus crisis and its impact on the economy, according to a March 31 firm memo.

Clark Hill

Clark Hill, based in Detroit, has instituted cost-saving measures including a pay reduction for attorneys and staff, a freeze on discretionary spending and a revision of certain benefits, according to a statement provided April 2 by the firm. The firm also furloughed some employees.

“We hope that this will be a temporary measure, and anticipate that as we emerge from this period of global health and economic crisis, we will be able to revisit these difficult decisions,” a spokesperson said in the statement.

Clayton Utz

Australian law firm Clayton Utz has instituted a hiring freeze and will consider reducing employee hours if economic conditions worsen.

Curtis, Mallet-Prevost, Colt & Mosle

The firm slashed associate salaries by 25%, Above the Law reported April 1. A Curtis spokesman said in an email to Law.com that the firm “is taking some steps similar to those reported by other firms in response to COVID-19.”

FordHarrison

The firm notified law students that it would cancel its summer associate program, because of the “uncertainty and challenges” of the COVID-19 pandemic.

Freshfields Bruckhaus Deringer

Freshfields has suspended its latest quarterly partner distribution. The firm will not pay any distribution to partners for the three months to April and is freezing pay for its lawyers as well as delaying a decision on what bonus levels will be. The firm’s bonus levels are usually decided in April but will now be reviewed in September. In addition, the firm is looking into flexible working arrangements and offering reduced hours for people who are interested. The measures are global but will differ depending on the region. The firm is trying to remain financially flexible so that it will not need to lay off or furlough staff.

Gilbert + Tobin

Gilbert + Tobin has cut back partner drawings by 50%.

KPMG – Australia

KPMG said equity partners across the entire firm have agreed to forego a partner distribution payment due in mid-April. It added that over the four months beginning in May they will take an effective pay reduction of 36%.

Loeb & Loeb

California-based Loeb & Loeb is temporarily reducing partner draws by 20% and deferring its April capital distribution to July, because the federal tax filing was moved to that month, according to a memo from chairman Kenneth Florin. The firm also reduced pay of income partners, senior counsel, of counsel, associates and senior staff by 15% and paralegals and other staff by 10%.

Marshall Dennehey Warner Coleman & Goggin

Marshall Dennehey president and CEO Mark Thompson announced in a firmwide email March 30 that the firm is suspending its 4% employer 401(k) match until next year. The policy is effective May 1. The firm is doing so in an effort to avoid layoffs, he said.

MinterEllison

At MinterEllison, equity partners have agreed to reduce drawdowns by half, effective immediately. It has also placed non-business-critical projects on hold, placed a freeze on new hires and deferred promotions until January 2021. Additionally, MinterEllison has introduced a temporary COVID-19 leave scheme and has asked all permanent employees to purchase six weeks of leave, which will be paid leave funded by a temporary salary reduction from April to December.

Munck Wilson Mandala

Midsize Texas firm Munck Wilson Mandala has reduced compensation for partners, associates, exempt directors and managers effective on Wednesday, but has no plans to reduce attorney headcount. Managing partner William Munck said in a press release that a limited number of salaried employees will be furloughed and some hourly employees will work reduced hours, but all employees will receive full benefits. Additionally, several partners have chosen to defer their base salary for the next three months, Munck said. According to Munck, the firm intends to treat the reductions as compensation deferrals to be paid by the end of the year or when practical.

Norton Rose Fulbright

Norton Rose Fulbright is offering staff in Europe, the Middle East and Asia reduced working hours and pay for one year in response to the COVID-19 crisis, as well as deferring the payment of partner distributions, staff salary rises and bonuses for both groups.

If 75% of eligible staff accept the reduced hours offer, which means they could be asked in the next 12 months to reduce their working hours and pay by 20%, the new program will commence on April 20.

Pryor Cashman

Pryor Cashman has furloughed some associates in response to a slowdown in work related to the coronavirus pandemic, managing partner Ronald Shechtman said. The leader of the 185-attorney firm wouldn’t specify the number of associates or say whether any practice groups were particularly impacted, but said the firm is “hopeful” and expects it can reinstate them once work picks back up.

PwC

PwC’s legal arm is freezing promotions, pay raises and bonuses across its whole U.K. business.

Reed Smith

Reed Smith is reducing partner distributions in response to the disruption and economic effects of the new coronavirus, the firm confirmed March 30. According to a report in the U.K. publication The Lawyer, firm management told partners last week that it will reduce monthly draws by 40% for the next five months for equity partners, and 15% for the next three months for nonequity partners globally.

Womble Bond Dickinson

Womble Bond Dickinson is temporarily cutting pay across the firm’s U.S. offices and furloughing or laying off some employees to weather the economic shutdown from the coronavirus pandemic. The trans-Atlantic Am Law 100 firm, which has about 550 lawyers in its U.S. offices, has instituted a 10% or less pay cut for all U.S. attorneys and staff, furloughed “some selected employees” and laid off “another small group,” Womble said in a statement to The American Lawyer.