Salary Cuts

DLA Piper Gives Back 10% of the Salary Cut

By  
on

Last week, we reported that DLA Piper cut associate salaries. But on Monday, we followed up that report with news that DLA had made salary cuts of up to 20% for associates who were not on pace to make their hours. Tipsters reported serious frustration with a 20% salary cut based on only a few months of accrued hours.
Well, last night there was a change in policy from DLA Piper. The firm is going to make a 10% cut across the board to all associates, regardless of hours:

We have had many conversations with partners and associates since making the adjustment, and it is clear that there are numerous anomalies in individual associate situations such that people who were typically strong performers would receive the additional compensation reduction. That is not the result we want to achieve, and we are therefore removing the additional adjustment based on year-to-date performance and maintaining a straight adjustment of 10% for all associates. We will continue to reward associates for exceptional performance in 2009 through our bonus program, taking into consideration both the associate’s performance and that of the firm.

It is an objectively good thing when a law firm responds to associate concerns. It seems that in this case, a wrong has been righted.
But, of course, not everyone is happy.
Additional complaints, after the jump.


The 20% salary cut feels like an overzealous attempt to quickly move away from lockstep compensation to a performance based system. The DLA memo says as much:

We are committed to developing a new overall performance-based approach to associate compensation, development and advancement that best serves our firm’s strategy and our business model. In that regard, we believe that the days of a “one size fits all” approach to these issues are over, and we look forward to charting a new course that is right for our firm. We will be working on this over the remainder of the year so that a fully-vetted program can be launched in 2010.

But one tipster points out a few fundamental problems with a performance based system that is overly focused on billable hours:

Did they really not realize a simple bright line billable hours-based calculation wouldn’t “take into account the timing of significant pro bono commitments, firm related non-billable hours or vacations”? Was that really not on the cognitive radar? An afterthought? They just didn’t give a single thought to it – it was a quick and dirty way to try and save money….
They did this in part because all of a sudden they had 2nd & 3rd years all over the country (including those who had just finished clerkships) making less than 1st years. (I.e., most associates got a 20% cut, from talking with other associates, meaning a 2nd year was making 160k because of the freeze, then lost 32k and was making 128k – a 3rd year was making 170k because of the freeze, then lost 34k and was making 136k – first years were making 145k in major markets). This went over like a sack of potatoes to the head.

Sponsored

The performance based rhetoric sounds fair, but the only metric most firms seem to have to gauge performance is the billable hour. Is moving from lockstep based on class year to lockstep based on billable hours (or the hoarding of billable hours) really “performance based”?
Of course, there is unlikely to be a perfect solution. At least not one that pays associates at DLA less than their counterparts at other firms. Despite getting money back, some associates are still very sad:

Is there any way management can actually be trusted? They seem to haphazardly make decisions and hope the market will follow … usually the partners in your own office are clueless while decisions simply get handed down from the very tip top. It is a top-down bureaucracy if I ever saw one.
Finally, associate morale here is horrible. Even though every memo intimates of a bonus plan for this year, they always attach “depending on the performance of the firm” to such statements – also whereas in previous years we have had bonus charts (that provide predictable bonus ranges), this year we have nothing! Essentially, the firm appears to be going to a plan where bonuses are entirely discretionary. Apparently, just like your salary. At this point, between the freeze and the 10% cut, the very best associates at the firm have foregone 20% of their reasonably-expected pay. If they are trying to force attrition, they will probably get it.

The legal industry is changing right in front of our eyes. We’ll keep you posted.
Earlier: DLA Piper Salary Cut Follow Up
Nationwide Salary Cut Watch: DLA Piper Joins the Party

Sponsored

Topics