JD Journal » salary cuts

Revenue and Profits Down at Goodwin Procter

joshua — Fri, 29 Jan 2010 21:18:42 +0000

Goodwin Procter’s gross revenues fell 4% in 2009 to $658 million and per partner profits dropped 3% to $1.27 million. Although discouraging, in a year marked by layoffs, deferrals and salary cuts it could have been much worse. The good news is that the firm is not taking it out on its associates, at least the ones that haven’t been laid off. The firm is paying bonuses and although associate salaries have not been restored to where they would be without a freeze, they have been thawed and bumped up one level, without a base salary cut.

Managing partner Regina Pisa expects revenues to stay flat in 2010 with increased work in real estate and real estate capital as the recovery heats up.

Goodwin Procter LLP employs 900 attorneys in Boston, Los Angeles, New York City, Silicon Valley, San Diego, San Francisco, and Washington DC.

Merit Based Pay at Drinker Biddle

joshua — Tue, 19 Jan 2010 19:35:24 +0000

Drinker Biddle is moving to a merit based pay system, becoming the latest in a string of major law firms to abandon lockstep compensation. Under the new plan associates in their second year and beyond are broken down into four tiers. Each tier has a baseline salary but the firm is quick to emphasize that final salaries will recognize the individual contributions an associate makes to the firm’s success and could rise well above the minimum salaries. There are also two separate scales for major markets such as New York, and offices in other locations.

Associates in New York, Chicago, Washington DC and California will have base salaries of $145k, $165k, $185k, and $250k depending on tier, with the top tier reserved for those expected to make partner within two years. Outside the major markets, salaries range from $130k to $185k. Abovethelaw.com is reporting that this represents a salary cut for 53% of Drinker Biddle’s associates, but that’s based only on minimum salaries for each tier and may not be reflective of final salaries.

This system applies to associates in their second year and beyond. Drinker Biddle is continuing its new first year program, as reported here. First year associates will undergo extensive training while drawing salaries of $105k, and clients will be charged a reduced rate for any work done by this group.

Drinker Biddle & Reath LLP was founded in Philadelphia in 1849. The firm has more than 650 attorneys in 12 offices in the US. Its largest offices are in Philadelphia; Chicago; Florham Park, New Jersey; and Washington, DC.

Layoffs at Seyfarth Shaw

joshua — Fri, 15 Jan 2010 18:20:19 +0000

Seyfarth Shaw is letting go of approximately 40 people, 20 lawyers and 20 staff. It’s been rough over at Seyfarth over the past year and they’ve taken several steps to keep costs down. In December, the firm cut salaries as part of a move toward merit based compensation. In November, it re-deferred half of its already deferred first years for an entire additional year, while cutting the salaries of the first years lucky enough to actually start working. In August, the firm announced that it would not have a summer program in 2010 and in May, Seyfarth laid off 50 people and cut some salaries.

Chicago’s Seyfarth Shaw LLP is a full-service law firm founded in 1945. It has ten offices, nine of which are in the United States. The firm is well known for its labor and employment, employee benefits, litigation and business services.

Morning Roundup

joshua — Thu, 14 Jan 2010 13:38:11 +0000

Good morning everyone! Today is Thursday, January 14, and here’s a quick look at yesterday’s news…

The Supreme Court ruled against televising the Proposition 8 trial…

The Practicing Law Institute will hold a symposium on “hot button” topics on February 1…

Dyncorp is being sued by two National Guardsmen…

Robert Pringle is the antitrust lawyer of the year, says the California Bar Association…

Jones Walker adds two attorneys to its health care practice…

WilmerHale picks up a former DoJ Principal Deputy Associate Attorney General…

Bondurant Mixson & Elmore promoted two partners…

Kaye Scholer cuts salaries…

MG&C has eight new partners…

and Jackson Lewis opened an office in Baltimore…

Salary Cuts at Kaye Scholer

joshua — Wed, 13 Jan 2010 18:45:14 +0000

Kaye Scholer is cutting first year associate salaries to $145k, but unlike many other firms they aren’t doing it under the guise of abandoning lockstep compensation. Additionally, any associate that hits their billable hour target by December will be getting a bonus that should bring them back to or above $160k. In the meantime, associates that hit 1800 hours last year will be getting their lockstep raises, and Kaye Scholer has announced bonuses ranging from $20k to $40k for 2009.

In order to qualify for the 2009 bonus, associates must have billed 2200 hours (for $20k) and 2400 hours (for $40k), but the interesting kicker is that all classes are receiving the same bonus, providing they hit the targeted number of hours. For junior associates that made the goal, this is an above market bonus, although it’s a bit light for senior associates in the 2200 hour category.

Kaye Scholer was founded in 1917 by Benjamin Kaye and Jacob Scholer. The firm has more than 500 attorneys in eight offices located in New York, Chicago, Frankfurt, London, Los Angeles, Shanghai, Washington DC, and West Palm Beach.

Salary Cuts and Merit Based Compensation at McDermott Will & Emery

joshua — Tue, 12 Jan 2010 20:53:01 +0000

McDermott Will & Emery is moving to a merit based compensation system beginning in 2011. Like several other merit based plans we’ve detailed on these pages, this is a three tiered system. Some firms have moved to a merit based plan that holds the line on starting salaries, while others have cut base pay. McDermott is squarely in the latter category.

Under the new plan, associates on the bottom tier will have a base salary of $145k. Any associates looking for a bonus plan that will help make up the difference in base salary may be disappointed. The bonuses will be based on market conditions, the success of the firm, and merit. If the market scale for bonuses is anything like 2009, McDermott associates will need the bonus just to catch up to the base salaries their contemporaries are earning.

As noted, this plan isn’t going into effect until next year. This year the firm is just cutting salaries. New associates will be pulling in $145k and second year associates are seeing their pay cut to the same level. Which, remarkably, is the same as it would be under the merit based system that isn’t actually in effect.

McDermott Will & Emery LLP, founded in 1934, is a prestigious international law firm headquartered in Chicago, Illinois. It is one of the top 10 largest law firms in the United States and one of the 20 largest in the world.

Morning Roundup

joshua — Fri, 08 Jan 2010 12:20:47 +0000

Good morning! It’s Friday, January 8, and here’s a peek back at yesterday’s stories…

Two firmsin the Carolinas have merged…

California Governor Schwarzenegger has appointed three attorneys to state posts…

There are conflicting reports on the pace of law firm mergers in 2009…

Sedgwick picked up seven attorneys in California…

Jaffe Associates is now known as Jaffe PR…

Moore & Van Allen hired the former mayor of Charlotte…

Controversy is swirling around the legal protections offered to the Christmas bomber…

And some first years at Pillsbury are getting hit with a salary cut…

Holland & Knight is the Next to Abandon Lockstep

joshua — Fri, 18 Dec 2009 21:46:28 +0000

I think it’s time for some new terminology. Lockstep compensation referred in the past to associates moving up in pay scale in “lockstep” with their contemporaries. All associates from the same class got the same raise, year after year. But it also holds another connotation – that all biglaw firms move together in lockstep when it comes to associate compensation, in order to not be left behind in what used to be fierce competition for the top graduates each year. Well the firms are still in “lockstep”, but now they’re marching together away from class based yearly pay raises and into merit based systems.

Holland & Knightis the latest firm to join the lockstep march away from lockstep compensation. The firm is moving toward a merit based system but unlike the three tiered system being floated by many of its competitors, H&K will go to an individualized system that they believe is more fair to the attorneys. In a bizarre twist (and a cutting edge use of the English language) H&K characterized the systems being adopted by others as being uncertain, providing little stability for associates, and said “… we’re moving to a system with a lot of quantitative and subjective factors.” Setting aside for the moment that a system using subjective factors to determine salaries is not likely to be universally accepted as fair, certain or stable, there’s also the interesting contradiction between quantitative and subjective factors. Does anyone else think this sounds like being “a little bit pregnant”?

H&K, again like nearly all its contemporaries, is using this time to cut first year salaries. In addition to the overall salary cut that happened in July, first year associates are taking another ding, dropping down to $130k.

Holland & Knight is a law firm with more than 1,150 lawyers in 23 US offices. Foreign offices include Beijing, China, and Mexico City, Mexico, with representative offices in Caracas, Venezuela, and Tel Aviv, Israel.

Seyfarth Shaw Abandons Lockstep

joshua — Thu, 17 Dec 2009 18:54:12 +0000

Like many firms before it, Seyfarth Shaw is abandoning lockstep starting in 2011. Details haven’t been released, not even to the associates who must now spend next year trying to hit performance goals that have not been announced in order to receive salaries that have not yet been determined but that’s just part of the charm of working for biglaw. 2010 salaries will be based on 2009 performance and although exceptional associates can expect a 5% salary increase next year, those that merely met expectations will be rewarded with a 5% pay cut. Exceeding expectations without being exceptional is good enough to get you a salary freeze, so a second year associate that is exceeding expectations can expect to be paid the same as a wet behind the ears first year and a second year associate meeting expectations will be paid less than colleagues that haven’t had the pleasure of prepping their first document. Seyfarth Shaw’s web page says that they pay “competitive salaries”. Who knew that meant competing with each other to avoid being paid less than a first year…

I’m not sure which is more insulting – getting a 2010 pay cut for meeting 2009 expectations, or being told that at the end of 2009.

UPDATE: A tipster reminded me that Seyfarth Shaw has already cut the salaries of the incoming first year associates by five to ten percent, so meeting expectations isn’t going to drop your salary below that of a first year associate after all. Well, isn’t that a relief.

More Bonus News – And it’s a Little Different

joshua — Thu, 03 Dec 2009 01:38:04 +0000

Two more firms have announced their bonus schedules and they’re a bit different from the Cravath scale.

Sullivan & Cromwell is paying bonuses ranging from $7500 to $35,000 depending on class year. The only change is at the high end where senior associates will receive $5000 more than at firms on the Cravath scale.

Patton Boggs is doing things differently. They are paying bonuses based on both class year and the number of billable hours by which an associate exceeded their target goal. The scale ranges from $5000 to $45000. You’ll note that it’s lower on the low end and higher on the high end, but more importantly it cuts out completely anyone that missed their target goal for billable hours. Given the state of the legal economy I have to wonder how many associates won’t be getting a bonus at all, and of those that do, how few are hitting that top mark.

Patton Boggs also told its associates that those that missed their billable hour target by a large enough amount would receive a salary cut. Missed by 300 hours? That’s a 10% pay cut. Missed by 500 hours? That’s a 20% pay cut. And since salaries are remaining frozen, that means a third year associate that missed by 500 hours will receive $122,000 next year while new first years get $160,000.

Chadbourne & Parke Restoring Salaries

joshua — Mon, 30 Nov 2009 20:29:57 +0000

In April, Chadbourne & Parke cut associate salaries and promised that some or all of the money would be returned based on each associates contribution to the firm. Now it appears that all of the money cut from salaries will be restored in a lump sum payment in early 2010. On the one hand, this appears to be good news for a legal industry that has been struggling along with the rest of the economy. Chadbourne had a ready made excuse to keep some of the money but isn’t doing it. On the other hand, half of Chadbourne’s class of 2009 is still deferred indefinitely.

New York’s Chadbourne & Parke LLP, founded in 1902 by Thomas L. Chadbourne, employs 400 lawyers and tax advisers in 13 offices in nine countries. Chadbourne is best known for its global practice in project finance and energy, international insurance and reinsurance practice, multi-jurisdictional litigation in courts from Rhode Island to Russia, and corporate transactions.

Sutherland Ditches Lockstep

joshua — Mon, 23 Nov 2009 22:29:05 +0000

Atlanta based Sutherland is joining the rush to abandon lockstep compensation and is moving to a merit based system similar to the one other top firms have adopted or are planning to adopt. Associates will be classified as junior, mid-level and senior, with the levels roughly corresponding to their time in the firm. Unlike lockstep compensation increases, however, it’s possible for an associate to move forward at a faster or slower pace than his or her classmates, based on demonstrating proficiency at certain core skills. Sutherland says this change is designed to meet the wishes of their clients, many of whom are unwilling to continue to pay billing rates based solely on the length of time an associate has been with the firm.

Additionally, Sutherland is cutting the pay for new associates in its Atlanta office, but associates in its other offices will continue to earn $160k. Atlanta associates will now start at $135k.

Hard Times at Seyfarth Shaw

joshua — Fri, 20 Nov 2009 20:14:47 +0000

Seyfarth Shaw has told half of its deferred associates that they will not be starting in January as planned. Instead, they are being redeferred to October 2010, and will receive a stipend of $2000 dollars per month starting in January. If that wasn’t enough bad news, Seyfarth is also cutting the salaries of first year associates by five to ten percent. One can only hope that the deferral stipends aren’t subject to those cuts.

Yes, it’s nice to get paid $2000 a month to do nothing, and yes, it’s possible in some parts of the country to live on that kind of money, but in general biglaw doesn’t have offices there. Keep in mind that we’re talking about lawyers that graduated in June, got a job, and are now having to wait almost a year and a half to start working – assuming that things improve enough to start at all. With more firms pushing start dates back to October of next year, are there going to be jobs available for the 2010 grads?

Reed Smith Cuts Salaries

joshua — Tue, 10 Nov 2009 17:51:59 +0000

Just a few weeks after announcing it was moving away from lockstep compensation and doing away with associate classes, Reed Smith is cutting associate salaries by 20% for all incoming associates and reducing their billing rates by an equal amount. This move is certain to be popular with clients who are unhappy with paying full rates for new lawyers, in effect paying for on the job training.

Billable hour targets for first year associates have also dropped from 1900 to 1700 so that the new lawyers can take advantage of new training programs.

Founded in 1877, Reed Smith LLP employs 1500 attorneys in 23 cities worldwide. The firm counsels 28 of the top 30 US banks, and 10 of the world’s 12 largest pharmaceutical companies. In addition to the United States, Reed Smith has offices in the United Kingdom, continental Europe, Asia and the Middle East.

Scary Days at Drinker Biddle

joshua — Fri, 30 Oct 2009 16:23:31 +0000

Drinker Biddle managed to avoid deferring its incoming associates this year by cutting salaries, as we reported back in May. Apparently that wasn’t enough, as sources are reporting more than twenty associates were laid off yesterday. So far, it appears litigators are safe, with most cuts coming from tax and corporate practice groups. As we get more detailed information, we’ll keep you posted. If you have information for us, remember that tips are always anonymous and can be submitted here.

Drinker Biddle & Reath LLP was founded in Philadelphia in 1849. The firm has more than 650 attorneys in 12 offices in the US. Its largest offices are in Philadelphia, Chicago, Florham Park, New Jersey, and Washington, DC.

We’re Doing This for Your Own Good… Really!

joshua — Thu, 29 Oct 2009 16:55:28 +0000

Do you wake up every morning hoping that today will be the day that your firm will improve attorney development, and strengthen its ability to recruit, retain and develop the best talent at all professional levels by cutting your salary? If so, you may want to consider moving to Foley Hoag.

In a firm wide memo obtained by abovethelaw.com Foley Hoag has done just that. The salaries of all first through third year associates and some fourth years have been cut by ten percent in order to meet the aforementioned lofty goals. As bad as that sounds, this comes on top of salary freezes that had second year associates making the same as first years, so with the ten percent cut, second year associates and some third years are now making less than they did as first years.

Maybe this will be the start of a new trend. Maybe law schools around the country will pick up on the idea and charge less for second year students than first year students. Maybe student loans will lower the interest rate each year. Seems about as likely as retaining the best talent by cutting salaries.

New Round of Salary Cuts at Allen Matkins

joshua — Fri, 23 Oct 2009 18:23:54 +0000

Allen Matkins is having a rough year. Back at the end of March the firm let some attorneys go. First year associate salaries were cut, along with the salaries of some additional associates. Now it appears they are finishing the job with additional layoffs and more salary cuts.

Tipsters at Above the Law reported the new cuts, saying that associates who are low on hours will only be receiving 60% of their original salary with the other 40% to be paid at the end of the year if the hours are made up. How they’re going to make up the hours in this market is anyone’s guess.

If you have any further information about what’s happening at Allen Matkins, please fill us in here.

Update: According to our own tipsters, all associate and paralegal salaries have been slashed to 60%.

Morrison & Foerster Lower Incoming Associate Salaries in California

joshua — Tue, 20 Oct 2009 10:05:38 +0000

Morrison & Foerster is lowering the starting pay of its associates to $145,000 in California, while associates in New York and Asia will continue to receive the same pay. The firm is the first Big Law firm to lower California rates, which are generally the same as New York rates with associates in other offices receiving less. Firm Chairman Keith Wetmore noted that this is actually a return to the historical practice of major law firms paying associates in New York more than in other cities, in part due to higher billing rates.

Other firms have dropped salaries for first year associates this year, but they’ve kept New York and LA parallel.

Nixon Peabody Lay Offs – Shhhh

joshua — Fri, 09 Oct 2009 19:36:45 +0000

In February we told you about staff layoffs at Nixon Peabody, and in April we reported on salary cuts. Those salary cuts were billed as a way to save associate jobs in a struggling economy. Now it appears that those cuts were not enough and that Nixon Peabody has been quietly laying off 2nd and 3rd year associates. The affected attorneys are being let go based on performance, but performance in this case may mean there’s not enough business for you to keep up with your billable hours. Unlike earlier cuts, the firm has remained tight lipped about these layoffs, so exact numbers are hard to come by. If you have more information or want to share your own layoff story anonymously, send us a tip here.

Chadbourne Defers Half its Incoming Associates

joshua — Mon, 28 Sep 2009 16:53:53 +0000

Half of the incoming class of associates at Chadbourne & Parke have been deferred indefinitely. The firm will pay the deferred associates an additional stipend of $60,000.

This deferral comes on top of salary cuts in April and layoffs in March.

Florida County Lawyers Protest Salary Cuts

Erik Even — Fri, 24 Apr 2009 16:21:17 +0000

Dozens of Broward County, Florida public lawyers and staffers protested in front of a Fort Lauderdale courthouse this week, over proposed salary cuts for state employees.

The protesters included a variety of justice personnel, from public defenders to court interpreters. They believe they are already overworked and underpaid, and that further cuts are unfair.

The state House of Representatives wants to cut up to 5% of pay, while a Senate bill calls for a 1% cut for persons making over $100,000 a year.

Protesters also circulated a petition to be sent to state legislators.

Brownstein Hyatt Lays Off 15 Attorneys, 22 Staff

Erik Even — Fri, 10 Apr 2009 18:46:45 +0000

Denver’s 200-attorney Brownstein Hyatt has laid off 15 attorneys and 22 staff.

Partners consulted with associates to determine a balance of salary cuts and layoffs. By accepting salary reductions, the associates saved 8 jobs.

Income shareholders, counsel and policy advisers took a 10% pay reduction; associate salaries will be reduced by 8.5%; and senior management pay will be reduced by 5%.

Brownstein Hyatt Farber Schreck has offices in Albuquerque; Aspen, Denver and Glenwood Springs, Colorado; Lake Tahoe and Las Vegas, Nevada; Los Angeles, Costa Mesa, Sacramento, San Diego and Santa Barbara, California; Santa Fe; and Washington, DC.

William Fry Lays Off 17, Cuts Pay

Erik Even — Sun, 05 Apr 2009 17:19:22 +0000

Dublin law firm William Fry has made 17 staff redundant, and implemented pay cuts of up to 10%.

The firm, one of Ireland’s “big five” legal practices, informed its 400 staff of the decisions this weekend.

The pay cuts will apply to all employees on a sliding scale.

William Fry has 63 partners, and offices in Dublin and New York. It also has a formal association with Belfast law firm Tughans.

Allen Matkins Cuts 10, Slashes Salaries

Erik Even — Tue, 31 Mar 2009 21:22:08 +0000

California’s Allen Matkins has cut six associates and four staffers, according to online sources.

In addition, first years’ salaries have been cut from $160,000 to $145,000.

Other associates will see their salary reduced by up to 30%; the criteria for choosing which associates will be affected have not been announced.

Allen Matkins Leck Gamble & Mallory LLP was founded in 1977 and is headquartered in Los Angeles, California. The firm has additional offices in Century City, San Francisco, Orange County, Del Mar Heights, and San Diego, California.

Stroock Decimates Its Lawyers & Staff

Erik Even — Mon, 30 Mar 2009 20:29:08 +0000

Stroock & Stroock & Lavan is laying off 10% of its associates and staff today.

The firm is considering salary cuts for its remaining associates, and may defer its incoming class.

Stroock & Stroock & Lavan LLP is based in New York City, with approximately 350 lawyers in three offices, including Miami and Los Angeles. It was founded in 1876.

Rumor: Katten Layoffs Today

Erik Even — Thu, 19 Mar 2009 18:03:32 +0000

Katten Muchin Rosenman is laying off around 30 lawyers today, according to reliable sources.

The firm may also announce a 20% pay cut for survivors.

If you know anything about the situation at Katten, please send us a confidential tip!

Katten Muchin Rosenman LLP has offices in Chicago; New York; Los Angeles; Washington, DC; Charlotte, North Carolina; Palo Alto, California; and Irving, Texas; with an affiliated entity, Katten Muchin Rosenman Cornish LLP, in London, England. The firm has over 650 attorneys practicing in more than 40 areas.

Dewey & LeBoeuf Partners Hit with Salary Cuts

Erik Even — Sat, 14 Mar 2009 16:36:18 +0000

Dewey & LeBoeuf announced that 66 partners of its 350 partners have seen pay cuts in the last 15 months.

Some partners have seen their compensation reduced by as much as 80%. The salary reductions are meant to encourage less productive partners to seek employment elsewhere.

The affected partners include some who have been practicing for 25 years or more.

The more fortunate are now taking home $25,000 a month, standard for partners. Lower-tier partners have seen more drastic reductions, with monthly pay of as little as $10,000 — less than the starting salary for a 2008 incoming first-year.

Dewey has shut offices in Jacksonville, Florida; Austin, Texas; and Hartford, Connecticut.

Dewey & LeBoeuf is a white shoe law firm formed in 2007 by the merger of Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae. The firm has 24 offices in 14 countries.