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

Arent Fox

The Washington, D.C.-based firm made cost-cutting moves including 25% pay cuts for associates and staff and 60% reduction in equity partner distributions, according to Above the Law. In response to the economic slowdown, a firm spokesman said, Arent Fox made a “temporary pay cut for all attorneys, professionals and staff.”[4]

Baker Botts

On April 27[5], the firm announced it would impose temporary pay cuts for lawyers and staff making more than $70,000, but no layoffs or furloughs. According to a memo that managing partner John Martin sent to the firm, partners have agreed to compensation reductions “to absorb the bulk of the financial impact.” Also, for a three-month period beginning May 1, the firm will 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.

Additionally, the firm deferred the start date for its incoming class of associates until 2021. 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.

The firm will defer the start of its 2020 summer program by at least a month. The firm expects to host an online summer training program and the firm will extend offers to all summer associates, contingent on maintaining strong academic performance.

In a July 29 internal email, Baker Botts managing partner John Martin announced that effective Sept. 1, the firm planned to restore[6] 50% of the compensation reductions put into effect May 1. The firm also said it would pay interim bonuses for non-partner timekeepers who have made “exceptional contributions” for the May 1 to July 31 period.

Baker, Donelson, Bearman, Caldwell & Berkowitz

Baker Donelson has temporarily reduced draws[7] 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.”

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