Nationwide Pay Freeze Watch: Brrr! Things are getting chilly beneath the Mason-Dixon Line
While many firms announced their decisions to freeze 2009 salaries at the end of 2008, a few waited until now to make up their minds.
Memos went out before the first paychecks of the year to associates at Atlanta-based Alston & Bird and Washington, D.C.-based Hogan & Hartson. Alston’s is a Slurpee freeze with the firm saying it may “revisit” the decision at an unspecified time this year. Hogan’s is a Solid Ice freeze; salaries are locked at 2008 levels throughout 2009.
The language of these memos has become fairly uniform— a jumble of “economic downturn,” “challenging,” “distress,” and “2009 may really suck for us.” Okay, maybe not the last phrase, but that’s the gist. Check out the memos, after the jump.
We’ve also received word that Schulte Roth & Zabel has frozen salaries until further notice, but the language leaves hope for a decision in the near future for a raise:
The firm has not yet made any decision with respect to associate salaries for 2009. We expect a decision will be made in the next few weeks, and any change will be retroactive to January 1.
Not all firms are bracing themselves for a difficult 2009 by freezing salaries. In response to our requests for salary raise information, we heard back from associates at Cleary; Stoel Rives; Perkins Coie; Fried Frank; Irell; and Schiff Hardin. A host of others are named in Firms that have not frozen, a post in the ATL Community section.
Memos from Alston, Hogan, and Schulte about frozen salaries, after the jump.
ALSTON & BIRD MEMORANDUM
As you all know, 2008 was a year of unprecedented economic distress across global financial markets. No sector is immune from the impact of the economic downturn, including law firms. Throughout 2008, firm management implemented a variety of measures to address the financial situation. As the Partners Committee has engaged in the budgeting process for 2009, it has become apparent that additional expense savings are mandated for sound financial stewardship of the firm.
To that end, associates will be paid the same base compensation in 2009 as they were paid in 2008: in Los Angeles, our associates will move to the new A&B pay scale, but at their 2008 class year level. This is only one aspect of our continuing efforts to manage expenses and costs. We will persist in these efforts together and all firm personnel, including partners, will undoubtedly be impacted by these measures.
This decision will be re-visited through the year. Our bonus program for 2009 will remain in effect, as per our policy.
These are times unlike any other. By our prudent and thoughtful management of this enterprise, we can look forward to a successful 2009. Let’s turn our focus now to working with our clients and our communities toward that end. Thank you for your continuing and valued contributions.
HOGAN AND HARTSON MEMORANDUM
To: All Associates
From: The Executive Committee
Date: January 12, 2009
Re: 2009 Associate Compensation
As we move ahead with our 2009 planning, the firm has been carefully analyzing all areas of our business to address the economic downturn gripping world markets and affecting our clients and ourselves. We believe that our strategy, the diversity of our practice and our client base, our global reach, and the caliber of our lawyers will enable us to weather these difficult times and to emerge even stronger relative to our peer firms. However, like our peer firms and our clients, we are not immune to the effects of the downturn, and we anticipate that 2009 will pose a challenging economic environment for the firm.
Therefore, effective January 1, 2009, US associates moving to the next class year will not receive an increase in base compensation. Compensation adjustments for associates outside the US will be made on a market-by-market basis.
This action is one of many measures the firm is taking to deal prudently with the current economic environment. We appreciate your understanding and your support for the firm.
Jennifer Seibert
Managing Director - Administrative Group
HOGAN & HARTSON LLP
SCHULTE ROTH & ZABEL MEMORANDUM
From: Galligan, Susan
To: ^NY-All Associates; ^WDC-All Associates
Sent: Fri Jan 09 10:33:37 2009
Subject: 2009 Associate Salaries
The Firm has not yet made any decision with respect to associate salaries for 2009. We expect a decision will be made in the next few weeks and any change will be retroactive to January 1.
Susan
(97) Comments
Comments
fourth
Pay raises continued as usual at Fried Frank. Sorry guys.
I'd like to warm you up below your Mason Dixon Line
So, Schulte is leaving open the option of a clawback. That would be fun!
fifth
I like that Hogan & Hartson is listed as not having frozen in direct contradiction to this post. Time for an update me thinks.
Does anybody know anything about layoffs at Cahill?
Hogan has proved it is TTT. All throughout 2008, Hogan continually provided updates regarding how the firm was more profitable in 2008 than it was in 2007. Hogan has not been impacted by the economic downturn nearly as bad as some other firms due to its diversified practice.
Once the market started to show any weakness in terms of bonuses and salaries, Hogan jumped in with both feet. This obviously came as a huge surprise to all of us who billed roughly the same or more in 2008 as we did in 2007 (and have done in the new billable year). While other firms have reduced bonuses and frozen salaries out of need, Hogan did so simply because it saw an opportunity to cut pay without looking too bad.
It should be noted, however, that firms that have frozen salaries still remain a minority among Vault 50 firms.
I realize it's not "news" when a firm advances its associates, but I think it would help the cause to play up the good news (Cleary, e.g.) as much as the bad.
Thanks Hogan. Now every DC office will feel it is acceptable to freeze salaries regardless of the actual health of the firm or associate performance and collections.
" I think it would help the cause to play up the good news (Cleary, e.g.) as much as the bad"
So, reporting what firms are not freezing pay will help with collections and biz development? That's some powerful reporting.
This blog is now doing the big firms a service and the associates a disservice. partners can read this and think, "oh, schulte is freezing salaries." Of course, they'd be the first New York-based top 100 firm to do so.
Alas, it isn't true. Schulte always makes the formal salary decision in January so that the pay raises are always applied retroactively.
Can you at least try to report accurately?
Mass layoffs feared at Alston & Bird. What's the word Alston folks?
Hogan has proved it is TTT. All throughout 2008, Hogan continually provided updates regarding how the firm was more profitable in 2008 than it was in 2007. Hogan has not been impacted by the economic downturn nearly as bad as some other firms due to its diversified practice.
Once the market started to show any weakness in terms of bonuses and salaries, Hogan jumped in with both feet. This obviously came as a huge surprise to all of us who billed roughly the same or more in 2008 as we did in 2007 (and have done in the new billable year). While other firms have reduced bonuses and frozen salaries out of need, Hogan did so simply because it saw an opportunity to cut pay without looking too bad.
It should be noted, however, that firms that have frozen salaries still remain a minority among Vault 50 firms.
Hogan has proved it is TTT. All throughout 2008, Hogan continually provided updates regarding how the firm was more profitable in 2008 than it was in 2007. Hogan has not been impacted by the economic downturn nearly as bad as some other firms due to its diversified practice.
Once the market started to show any weakness in terms of bonuses and salaries, Hogan jumped in with both feet. This obviously came as a huge surprise to all of us who billed roughly the same or more in 2008 as we did in 2007 (and have done in the new billable year). While other firms have reduced bonuses and frozen salaries out of need, Hogan did so simply because it saw an opportunity to cut pay without looking too bad.
It should be noted, however, that firms that have frozen salaries still remain a minority among Vault 50 firms.
Over/Under on how long it takes King & Spalding to freeze in response to A&B? These firms seem to move in lockstep...
heard that baker mckenzie also froze salaries last week in addition to the layoffs.
12 didn't deny the possibility of a clawback. You heard it here first--Schulte is considering **reducing** salaries and clawing back the difference back to January 1. An ATL exclusive!
Hogan is real TTT. Yeah. Chief Justice of the Supreme Court was a partner there. But it's still TTT.
'It should be noted, however, that firms that have frozen salaries still remain a minority among Vault 50 firms."
But still a larger number than have confirmed increases, no?
love how a firm fires 10% of its associates and that is not really big news but a potential absence of raises causes outrage - do any of you fuctards actually work in biglaw?
Any word on what Wilmer, Williams & Connolly, Cov, and A&P are doing salary-wise in DC?
any info on ropes?
"Hogan is real TTT. Yeah. Chief Justice of the Supreme Court was a partner there. But it's still TTT."
Not still. Is now. Roberts was the one thing keeping that wreck afloat. All Hogan associates should be running to the exits.
21, do you work in biglaw? Or are you a weakling who bills nothing and reduces all other associates comp as a result?
Those who are successfully working in biglaw would much prefer a firm trim its 10% of worthless associates rather than reducing the comp of those who are working the same or more than they did in boom times.
18, what are you talking about? SRZ didn't pay 2009 increases in connection with the first pay day of the year. Do you even know what a clawback is? Either salaries are staying the same or they will pay a retroactive raise. There is nothing to clawback.
So if a SCOTUS Chief Justice was once a partner there it's great, even if they pay crap. I don't think so.
" Either salaries are staying the same or they will pay a retroactive raise. There is nothing to clawback."
I see nothing that says that salaries will not be cut. When there are cuts, there will be clawbacks. Beware the SRZ clawback of '09--it will be the stuff of legend.
Oh, and 26, you clearly can't read more than 16 words without losing the thread--word 17 was "reducing". No wonder SRZ is going to cut your salary and clawback the excess from your first few paychecks.
Well crap - now all of DC is going to freeze.
28/29 - sucks to have been laid off, huh?
too cold, gay, and bitter -- did not read
agreed 29. 26 -- a clawback works either way depending on who's doing the clawing. If the firm overpays (or "reduces" salaries), it does the clawing; if they underpay (or grant raises), you do the clawing.
Congrats to Hogan for finally being a market leader. When salaries are on the rise, Hogan is the last to open its mouth. When comp starts to fall, Hogan wants to drive the train.
Cheap bastards.
Any news out of Boston? What are Ropes/Wilmer/Goodwin doing with associate salaries?
when i was growing up in idaho, the communists said rock-n-roll was subversive....mebbe tehy were right!
31--Don't know. But its clear you know how much it sucks to be a douchebag.
WHY WHY can't people learn not to click "Post Comment" more than once? It's not difficult. ATL is supposedly read by intelligent Biglaw lawyers.
It's just like law school, when after 3 years people still couldn't figure out how to get the roll sheet passed around the room without missing an entire section. I guess "up one row, down the next" was just too complicated
Can we do a post about delayed start dates for incoming first years
WHY WHY can't people learn not to click "Post Comment" more than once? It's not difficult. ATL is supposedly read by intelligent Biglaw lawyers.
It's just like law school, when after 3 years people still couldn't figure out how to get the roll sheet passed around the room without missing an entire section. I guess "up one row, down the next" was just too complicated
WHY WHY can't people learn not to click "Post Comment" more than once? It's not difficult. ATL is supposedly read by intelligent Biglaw lawyers.
It's just like law school, when after 3 years people still couldn't figure out how to get the roll sheet passed around the room without missing an entire section. I guess "up one row, down the next" was just too complicated
"Any news out of Boston? What are ...Wilmer ... doing with associate salaries?"
Why on earth would news about Wilmer be coming out of Boston? Wilmer is a DC firm. Hale & Dorr is a memory.
Say, what's the word on Donovan Leisure? Has Mudge Rose announced bonuses?
Firms below the Mason Dixon line are racists!
What's the deal with Biglaw Denver?
worried in Phoenix
For those looking for Boston info, I know that Crane, Poole & Schmidt did raise salaries and bonuses were at Skadden levels.
Many more freeze firms will announce soon. Sorry boys and girls, but there is a DEPRESSION happening just now (thanks Bush!)
I expect virtually all firms will have announced freeze policies by the end of the week. Those that mistakenly gave salary bumps in the first pay periods will simply need to acknowledge the error in all likelihood. Hope I am wrong, but doubt it.
Simon, Bennet, Roberts, Oppenheim and Taft annouced 190k Salaries.
46 = Hogan troll
fiftieth
@38/40/41 Were you being ironic?
Kash,
We'd rather see simple stats than a slew of memos. Again, very simple. Just post a table, two columns: List of confirmed raises, list of confirmed freezes.
You've already made clear that you don't think firms raising as normal is "news" but we beg to differ. If you'd prefer three colums with confirmed raises, "cold hard freezes" and "slurpee freezes", then that would be just dandy.
Thanks,
-The Readers
52, excellent post. I whole-heartedly agree -- this is the information we need to see.
47 = Hogan troll
Is there a chart of who has and who hasn't frozen? I don't know that's it accurate to say more firms than not have not frozen?
45 - worst post of the day
It needs to have three columns: Raise per 2008 pay schedule, freeze on 2008 pay schedule, reduce from 2008 pay schedule. Watch out for the clawback, kids, as your firm goes from presumed Column 1 (with the first few paycheck reflecting a raise) to Column 3.
nice for the A&B lawyers in LA
Don't worry people, everything will be all right and the pay raises will be restored once Barack Obama raises taxes on law firm partners and other business owners.
Yes We Can!
"nice for the A&B lawyers in LA"
Is it? Is the "new A&B payscale" better than what the LA payscale was in 2008? And it's only 25 of them.
A&B Insiders--
What's the story over at A&B? How are things playing out internally?
Other ATL lawyers:
Are there any other ATL firms that are in freeze mode? What about stealth layoffs?
I'm sorry about having to ask in this way. It would be nice if there was some sort of blog devoted to breaking stories about this kind of stuff.
A&B just merged with a smaller firm in L.A., which had previously been at a lower payscale than the rest of the firm. The associates in that office were set to get raises to match the rest of the firm beginning January 1, and the e-mail was meant to reassure them that these would be safe, though they still only get raised to the firmwide salary of their 2008 class year.
Any word on what Kilpatrick Stockton (Atlanta) is doing with respect to associate salaries?
60 - sure it's nice for them. A&B took over WB which had a much lower salary and those lawyers at WB actually got a pretty nice raise.
A&B has been engaged in stealth layoffs for over 4 months. Check out the numbers in the Atlanta and DC offices.
There are many rumors in Alston's Atlanta office but the one's I have heard are demonstrably false. People need to just shut their traps. Spreading false or unsubstantiated rumors helps no one.
I notice my typo above. TTT and backwater jokes in 3...2...1.
Alston Atlantas is a backwater TTT
Which firm will be the first to freeze its associates, instead of simply freezing their salaries? They could thaw them out later, Encino Man-style, when there's more work to go around.
What about 63? What's the word on Kilpatrick?
KASH you can freeze my salary.
What's the scoop on Kilpatrick?
4, are you really that stupid?
Guys at my high school used to confirm their TTT status by freezing salaries. It was no big deal.
I cannot believe that I was disappointed when I got dinged from my CB at Hogan. Best thing that ever happened to me. What a TTT shit ball.
Agree with 75 completely
As an associate at Alston & Bird, all I can say is...
THIS IS EXCELLENT NEWS FOR JOHN MCCAIN!
72 -- KilStock was a crappy firm before the economy started going into the toilet; now, all bets are off -- especially if you are part of the Native American contingent fee practice that really has panned out.
What is the story on firms in Texas and freezes? On Friday someone posted that Vinson & Elkins had announced that it was NOT freezing salaries. What is the story here? Does anyone know whether this is true?
how many tards work at firms and, on the strength of one paycheck, think their firm will not freeze? most of the posters here?
newsflash dumbasses - virtually all firms will have frozen by this time next month.
I'm an 80's guy. Friendship means to me that for two bucks I'd beat you with a pool cue 'til you got detached
retinas. The salary freezes will go ahead as planned!
Proskauer is freezing. They have decided to no longer pay for heat.
12: Partners are way too busy these days to have the time it takes to read this blog.
King & Spalding didn't freeze. Paycheck stubs for 1/14 paychecks were posted today and the normal raises were reflected.
17 is correct
Why would A&B freeze the already super-compressed salaries?
Starting salaries for first-years remain the same, but seniors are further compressed.
A&B hates lawyers with experience.
So A&B freezes, but K&S raised salaries as usual. As if it wasn't already apparent, A&B is now second-tier in Atlanta (with the rest of us). Gasp!
Don't be surprised if Troutman, Kilpatrick, and other large Atlanta firms follow Alston's lead and freeze in 2009.
Once again, Atlanta is proving that it absolutely, without question the WORST biglaw market in the country. Unreasonble hours expectations + not enough work + shitty pay + high cost of living = Atlanta. Joy.
Alston layoffs confirmed. Not sure if total yet but seems to be centered in Corp and real estate. Lots of them and everyone is shocked. If you are one of the unlucky ones please chime in.
And for you law students- 1st years included.
Alston layoffs confirmed. Not sure if total yet but seems to be centered in Corp and real estate. Lots of them and everyone is shocked. If you are one of the unlucky ones please chime in.
And for you law students- 1st years included.
Can anyone give more info about the Alston layoffs? Numbers? Centered in Atlanta, or other offices?
87- i now work in the ATL after having worked in NYC. ATL is not a biglaw market. K&S, despite what you want to believe, is not a player nationally on the level of top firms. yes, they are good here in the south because of the political connections they have, but once they leave their backyard, they are a joke. the others are even worse.
ATL is what it is, a second (or third) tier market. There are about 10 or 15 top national lawyers in the entire city, and the rest are considered good only because they say they are.
sorry, but its the truth. FWIW, I love the ATL and wouldnt go back to NYC. I have a better life, have saved more money, my kids have a yard to play in and the weather is better.
73:
4 here. It was sarcasm, douchebag; of course it won't be fun.
In any vase, I don't see how you can parse that two sentence missive to determine that SRZ has ruled out a rollback in associate salaries. Wishful thinking does not equal reality; you must work with hedge funds.
the war on terror was lost -- destroy the financial market of USA. Osama won!
64--the LA deal isn't bad, but it's not fantastic. First, A&B isn't paying the LA folks what the people in, say, DC or NY are making. So, base salaries are not market (or even A&B's version of market). Second, A&B bonuses fucking suck. WB, the old LA firm, actually had a pretty decent bonus system for a firm of its stature. If you are a high biller, there is a chance you will make less at A&B. What do you get at A&B if you hit 1900 or 2000 hours? 8 to 10K before taxes? Who cares? But let's say you now make $25K a year more in LA. Is that worth trading for the big firm lifestyle, especially when you are tied to a sinking ship?
Hogan & Hartson is screwing its associates. First, they are trying to compare 2008 to 2007. Anyone with common sense is acutely aware that 2007 was a banner year, and is not going to be repeated each and every year. Oh yes, and a banner year in which Hogan still failed to pay a market bonus to its associates (much less any special bonuses like the other major firms). Second, in order to claim revenues are trending down, you would need at least three data points. Anyone who has taken a basic statistics course should know that you need no less than THREE data points to spot a trend. Again, their benchmark to 2007 is flawed. The market will turn in a few months, and when it does, the smart lawyers will get out of Hogan.
Job Elimination is next. Only ten staffers took the "voluntary retirement package", and now pay freezes. Can't retain Fortune status with layoffs, so A&B will now have job eliminations. Hang in there in this no jobs market.
Men, Women and children..... abandon ship!!!
Economic times are hard...... Personally, I am not thinking of any raises and bonuses.... what is important is.... we have jobs! Tough times calls for tougher measures.... and yeah, thanks to Mr. Bush!!!!!