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Salary Cut Watch: Chadbourne & Parke Takes a Stab at Salaries

Thursday, April 23, 2009 2:58 PM - By Elie Mystal

Salary Cuts.jpgChadbourne & Parke has already laid off associates. It has already frozen associate salaries. So perhaps cutting associate salaries outright isn’t too much of a surprise.

Associates at Chadbourne were just informed that their salaries would be cut. But they weren’t told how deep the cuts would go. Here’s the pertinent part from the firm-wide memo:

We will be reducing base salaries of attorneys, administrative personnel and other staff for the remainder of the year, beginning with the May pay period. All personnel will be advised of the reduction to their salary. Depending upon Firm financial performance and individual effort and contribution, all personnel will be eligible to recoup all or part of the amount of the reduction in the form of a bonus to be distributed at the same time discretionary bonuses have been traditionally distributed.

That really brings a whole new (and much more terrible) meaning to the term “special bonus.”

Just like with Baker & McKenzie, Chadbourne seems to be doing more than simply cutting associate salaries. The firm is doling out different cuts to different people, and it doesn’t appear that class year has a lot to do with it. It’s another shot at lockstep associate compensation.

Has Chadbourne management been listening to The Dow is Up Guy? Interesting details after the jump.

Chadbourne solid logo.JPGEven though Chadbourne and Baker & McKenzie are the only Vault 100 firms cutting associate salaries (as far as we know), management at Chadbourne believes that the salary cuts are simply prudent:

Some may say we are being overly cautious in aligning our expenditures based on the assumption of no significant increase in demand through the year-end. Perhaps so, but it is our belief that it is better to be conservative. If we are wrong, and we hope we will be, we can rectify the situation by the payment of bonuses.

Will Chadbourne’s conservative approach cost the firm on the recruiting trail this summer? Unlike layoffs or associate deferrals, most top firms seem to be avoiding salary cuts (so far).

We’ll keep you posted as individual associates find out how much they stand to lose under Chadbourne’s new policy.

Read the full memo below.

CHADBOURNE & PARKE — MEMORANDUM — SALARY CUTS

As we all know, the current global recession is proving to be longer and more severe than most had forecast. Many businesses have been severely impacted and have taken steps to reduce expenditures which are many times more draconian than those which law firms generally have taken and which we, in particular, have had to implement.

The steps we have taken to date to reduce expenditures have been done reluctantly, particularly those involving personnel reductions, but have been necessary to align our resources to the demand for our services. In view of the continuing global economic uncertainty, we believe we must plan based upon the assumption that the current conditions will not reverse dramatically before year-end.

We have not reduced personnel to the extent that some of the law firms which are experiencing the same decline in demand have, nor do we want to. We have great talented people at Chadbourne and we believe that further significant reductions would be counter productive for both the Firm and our clients.

That said, as a matter of prudence, we do need to reduce expenditures further. Accordingly, we will be instituting a reduction in salaries in our U.S. offices. We are hopeful that this action will avoid the need for additional reductions in our work force.

We will be reducing base salaries of attorneys, administrative personnel and other staff for the remainder of the year, beginning with the May pay period. All personnel will be advised of the reduction to their salary. Depending upon Firm financial performance and individual effort and contribution, all personnel will be eligible to recoup all or part of the amount of the reduction in the form of a bonus to be distributed at the same time discretionary bonuses have been traditionally distributed.

Some may say we are being overly cautious in aligning our expenditures based on the assumption of no significant increase in demand through the year-end. Perhaps so, but it is our belief that it is better to be conservative. If we are wrong, and we hope we will be, we can rectify the situation by the payment of bonuses.

We are also taking measures to reduce expenditures in our international offices. The measures taken in those offices will vary in some cases from what we are doing in the U.S. offices, taking into account local market conditions, requirements and circumstances.

We thank you all for your efforts in these challenging times.

Management Committee

Earlier: Salary Cut Watch: Baker McKenzie Brings Salary Cuts into the Vault Top 50
Nationwide Layoff Watch: Chadbourne & Parke Update

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