Remember back in February when Hogan & Hartson offered a “voluntary” buyout of a number of staffers? Yeah, well, apparently that didn’t work so well. After a tepid response to the buyout plan (Hogan chairman Warren Gorrell explains that only 28 staffers accepted the plan out of the 250 people that were offered the buyout), Hogan is bringing the hammer down on its staff. From an internal memo that employees at Hogan just received:

Over the past several months and in connection with other actions to control expenses in all areas, the Firm has engaged in an exhaustive analysis of the impact of current economic conditions upon our personnel needs and structure and the steps appropriate to address the challenges we face as a result of those conditions. Based on that analysis, we reluctantly have concluded that two steps are required at this time: (1) a layoff of 93 non-legal staff members in our U.S. offices;

But that’s not all. Hogan is also essentially cutting salaries on a whole bunch of people:

(2) temporary implementation of our established 1,800 hour associate compensation track in all U.S. offices for U.S. associates whom we cannot currently project will meet their 2009 billable hours expectation.

According to the memo, associates who are not on track to bill at least 1850 hours for 2009 will have their compensation bumped down to the 1800 hour level. In New York and Los Angeles offices (where there was no previous 1800 hours track) low billing associates there will be put on an 1800 hour track commensurate with the firm’s DC compensation scale.

And, just for good measure I suppose, the firm is also indicating that these cuts might not be enough, and attorney layoffs would be the next step:

We are hopeful that we will not need to continue this arrangement in 2010. Nevertheless, there can be no assurance that will be the case or that we might not have to take other measures to address staffing/work levels for associates in the future.

Finally, Hogan is also letting its overseas brothers and sisters know that layoffs probably will not be limited to U.S. offices:

The Firm is undertaking a detailed review of our associate and staff personnel requirements in our offices outside the U.S. Unlike our offices in the U.S., where personnel needs and rules typically follow a common pattern, the management of personnel needs in our offices outside the U.S. is influenced by local market requirements and other considerations. We are conducting an office-by-office review to ascertain whether staffing in those offices is at appropriate levels.

Good luck to all the staff laid off today. Take heart Hogan associates who didn’t average 155 hours over the first quarter, at least you still have a job.

Read the full memo after the jump.

HOGAN & HARTSON — MEMO — RESPONSE TO ECONOMIC CONDITIONS

To: All Personnel

From: The Executive Committee

Date: April 2, 2009

Re: Response to Economic Conditions

Over the past several months and in connection with other actions to control expenses in all areas, the Firm has engaged in an exhaustive analysis of the impact of current economic conditions upon our personnel needs and structure and the steps appropriate to address the challenges we face as a result of those conditions. Based on that analysis, we reluctantly have concluded that two steps are required at this time: (1) a layoff of 93 non-legal staff members in our U.S. offices; and (2) temporary implementation of our established 1,800 hour associate compensation track in all U.S. offices for U.S. associates whom we cannot currently project will meet their 2009 billable hours expectation.

In addition, we are undertaking a comprehensive review of associate and support staff levels in offices outside of the United States. This review is being conducted on an office-by-office basis, in coordination with the relevant Office Managing Partners.

U.S. Staff Layoff. It is with great regret that we have determined to implement a staff layoff in the U.S. We had hoped that the voluntary separation program we announced in February would largely address our staffing overcapacity. We made that offer to about 250 staff, but only 28 accepted it. The ever-increasing integration of technology into the legal practice, combined with a diminished need for staff personnel growing out of current economic conditions, has resulted in our being overstaffed with both assistants and personnel working in various Firm departments. We reluctantly have concluded that only through a layoff can we reach the reduced staffing level we need to achieve in order to operate efficiently in the future. The individuals being laid off are being personally contacted today, and each is being offered an above-market separation package of from 4 to 6 months of compensation, depending upon their tenure with the Firm (4 months for persons with less than 2 years of tenure, 5 months for persons with 2 to 5 years of tenure, and 6 months for persons with more than 5 years of tenure), together with a transition allowance to cover such things as COBRA medical insurance expense.

Affected staff will be notified personally over the next several hours. Their final work day will be tomorrow, April 3, and new assistant assignments will be announced to take effect Monday, April 6. The Human Resources Department, Office Managers, and Department heads will be coordinating reassignment of work from departing staff members.
1,800 Hour Track for Certain U.S. Associates. For a number of years, the Firm has offered associates two compensation tracks in most of our U.S. offices: one track has been set at 1,950 hours, and the second track has been set at 1,800 hours. Associates on the 1,950 hour track receive higher base compensation than associates on the 1,800 hour track. After having considered a wide range of alternatives, we have concluded that the best alternative for the Firm and for our associates is not to lay off associates but instead to temporarily implement our 1,800 hour track in all U.S. offices for associates whom we cannot currently project will meet their 2009 billable hours expectation. In arriving at this determination, we have taken into account many different factors, including the input that we received informally from a number of associates to the effect that they would prefer to see us try to address the current situation through compensation adjustments, rather than layoffs.

Accordingly, effective April 1, 2009, we will move to the 1,800 hour track those associates in U.S. offices who are not annualizing for the current compensation year at 1,850 or more billable hours. No other associates will be affected. In those offices where the 1,800 hour track is currently available, the base compensation for affected associates will be adjusted to the compensation rate for associates in their office working on the 1,800 track (with somewhat higher compensation levels for associates in the classes of 2006, 2007, and 2008). In New York and Los Angeles, where we have not previously had the 1,800 hour track, we will as a temporary measure use the same compensation as that paid to associates in Washington working on the 1,800 track (with the same somewhat higher compensation levels for associates in the classes of 2006, 2007, and 2008). In Houston, we have temporarily adopted a modified version of the 1,800 hour track compensation level.

We are hopeful that we will not need to continue this arrangement in 2010. Nevertheless, there can be no assurance that will be the case or that we might not have to take other measures to address staffing/work levels for associates in the future.

Review of Non-U.S. Office Personnel Levels. The Firm is undertaking a detailed review of our associate and staff personnel requirements in our offices outside the U.S. Unlike our offices in the U.S., where personnel needs and rules typically follow a common pattern, the management of personnel needs in our offices outside the U.S. is influenced by local market requirements and other considerations. We are conducting an office-by-office review to ascertain whether staffing in those offices is at appropriate levels.

* * *

We have come to these decisions only after extensive review of the alternatives, and mindful of the personal cost to those directly affected, as well as the temporary but significant disruption that all of us will experience. Ultimately, our judgment is that these actions, painful as they are, are necessary to the ongoing and future success of the Firm as a whole. These extraordinary times do not permit us to act as if the world has not changed.

With respect to the staff layoff, we recognize how traumatic this layoff will be, both for those who will be leaving the Firm and those who will be staying. It will be extremely hard to see the departure of colleagues with whom we have had close professional and personal relationships. They have been valuable contributors to H&H, and they will be greatly missed. Obviously, we would not be conducting the layoff if it were not compelled by the economic circumstances in which we, like other law firms and businesses generally, find ourselves.

Thank you for your cooperation and understanding in this sensitive and difficult matter.

Earlier: Hogan & Hartson Offers Buyout of 250-300 Staff