Add RSS RSS

Brownstein Hyatt: Deciding Between Layoffs and Salary Cuts in Denver

Friday, April 10, 2009 2:01 PM - By Elie Mystal

Brownstein Hyatt logo.jpgBrownstein Hyatt is a mid-sized firm located in Denver. The firm has over 200 attorneys, and like most firms, the global economic crisis has taken its toll on the firm. The firm has been forced to undertake the “hemlock package” of salary cuts and layoffs.

But the partners at Brownstein gave associates a choice on whether they wanted deeper job cuts and higher salaries, or deeper salary cuts against fewer job losses. The associates opted to have salaries slashed, and their decision saved the jobs of eight people.

But not everybody. Associates were told the final numbers via a firm wide memo yesterday:

Over the course of the past few days, we have concluded our discussions with those who will be departing. Across the Firm, 15 attorneys and 22 staff members will be leaving. This was one of the most difficult decisions we have had to make in the Firm’s history. Initially we looked at a greater number of attorney and staff reductions, but instead we adopted a number of cost cutting measures across the Firm, including pay cuts across several levels of the Firm. As a group, the income shareholders, counsel and policy advisors took a 10% pay reduction, associate salaries will be reduced by 8.5% and senior management personnel will be reduced by 5%. I appreciate the willingness of those affected to embrace a financial sacrifice to keep our personnel reductions to a minimum. I also must take a moment to thank [Redacted], our HR Director, for her efforts over the past several weeks and months. It was an enormously difficult job to implement these personnel decisions, and [Redacted] did it with professionalism and compassion. We must now move forward. We have had considerable success in generating new clients and new matters following our planning efforts at the shareholder retreat. Lets continue to focus on tremendous client service and teamwork, and recognize that we have the talent, dedication and vision to succeed in extraordinary economic times. Thank you for all of your support. Bruce Bruce James CEO/Managing Partner

Would you want to have this option at your firm? After the jump, associates on the ground fill us in with some Brownstein back-story. And managing partner Bruce James shares some additional thoughts.

Our sources jumped all over the “shareholder retreat” that is mentioned at the end of the memo. The shareholders went to Las Vegas for their annual gathering, just as other firms have done despite the economic downturn. And it certainly appears the shareholders did more than drum up new business during the Vegas trip. A tipster reports:

They had the partner retreat in Las Vegas (bumped down to the Mandalay Bay to save money they told us) mid-March. When they came back from the retreat, Bruce told us that they would be laying off 12-20 attorneys and 12-20 staff by April 8 (all staff and attorneys loved the 3 week delay between the announcements and the actual layoffs).

Other tipsters were concerned that the memo didn’t specifically address any reductions to profits per partner to help save jobs. Understandably, morale is pretty low among remaining associates:

The associates now are worried that, despite the pay reduction to save allegedly jobs, the firm is going to re-evaluate the need for cuts in a couple of months and then go back for another 8 associates as they had originally planned.

Above the Law reached out to managing partner Bruce James about these concerns. He addressed some of the difficult decisions the firm has made over the past couple of weeks. His statement appears below:

As noted in my firm wide message below, we implemented pay reductions across several categories, including income shareholders and you are correct, it did allow us to save an additional 8 associate positions. It is also important to note that only associates participate in the associate bonus pool which will allow them to fully recapture, or significantly exceed, their pay reductions if they meet certain objective criteria, including credit for up to 100 hours of pro bono work. Every firm culture is different, but in our firm it was the right decision to share the impact of this economy throughout our firm and to keep our personnel reductions at the lowest possible level. You are also correct in noting that we held a retreat in Las Vegas in March for all shareholders, of counsel and senior policy advisors. Las Vegas is the home of our second largest office, and one of our most productive offices in this recession. It would have been insulting to our clients and firm members in Las Vegas to cancel our meeting, and we decided not to embrace the hysteria over holding corporate meetings in Las Vegas. In our recent retreat, we met for two days with a focus upon revenue generating planning efforts, met with several clients before, during and after the retreat, and we are already seeing significant benefits from the ideas discussed at our retreat. Lastly, I believe associate morale is likely at an all time low for all AmLaw 200 firms. In this current economic climate, and with over 2500 associate layoffs in our industry year to date, it would be very unusual if morale was not significantly impacted. However, I believe that as the economy improves, and our firm continues to make the right planning decisions to position ourselves to succeed in the coming months and years, that morale will improve at our firm and throughout the industry.

Is this a persuasive argument? If not, what else would you like managing partners to consider as they attempt to address the market crisis? The bottom line is that associates were given the option of cutting their salaries, or suffering through even more layoffs. Do you think it was a false choice, or is this an appropriate way to spread the pain around?

Earlier: Sonnenschein partners are going to Vegas, baby! Vegas!

(96) Comments
Posted in: Layoffs, Salary Cuts

Comments

Comments hidden for your protection. Show them anyway!

Post Your Comment