DLA Piper Gives Back 10% of the Salary Cut
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.
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
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Comments
First impressions count.
fuuuuurst
Associates have nowhere to lateral to. They can do whatever they want to salaries.
If firms are going to cut associate salaries, at least do so by 50% so the opportunity cost of leaving big law is less. Then they won't need to fire anyone.
So basically "exceptional performance" only means billing above a certain threshold? A new low is the legal profession.
PE is a 1L.
The way these firms are handling these layoffs/salary cuts is embarassing. You would think no business in the history of time has ever had to make reductions or cut salaries. They are making a mess of the whole thing because they are terrified of market perceptions. The moron who came up with the original formula for the salary reductions is the one who should be fired.
The way these firms are handling these layoffs/salary cuts is embarassing. You would think no business in the history of time has ever had to make reductions or cut salaries. They are making a mess of the whole thing because they are terrified of market perceptions. The moron who came up with the original formula for the salary reductions is the one who should be fired.
So what? I am eating a bologna sandwich.
I would rather be a slave boy on Giedi Prime than be a DLA Piper associate.
At least when you get screwed without Astroglide, you get a tip on Giedi Prime even if it is a protein shake.
No, they gave back 50% of the salary cut, or 10% of the salary. Christ.
"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..."
Wow, such an amazing concept....people getting bonuses based on performance. Why does everyone think that they are entitled to a bonus every year? Biglaw Associates are like the douchebags at AIG, BOA, Merril Lynch, and all the other financial institutions who demand bonuses when their companies are imploding!
3
You are correct. The firms are slow to wise up, however. And, of course, there is the image hit, but than can be overcome if they show clients that substantial cost savings will accrue with associate salary cuts.
NY to $60K!
11's right. Fix the headline.
DLA is exhibit A that the Walmart/Citi model of mega law firms doesn't work. If I were a law student, I would focus on more elite regional firms or if you are qualified the super elite international firms with two or three offices. Cravath and Wachtell don't need an Dubai office to do deals in Dubai.
Don't believe the hype. These types of shops (ala Jones Day, Baker (take your pick), White & Case, Paul Hastings, etc.) are straining under their own weight.
You are all poor and wish you were me.
Louis Zaccareli Esq
11 is wrong. Please delete the comment.
#10
Well, the Democrats' celebration was short-lived. It's just being reported that Arlen Specter died. That's really sad.
Okay - you guys win. It looks like I'm about to be outed anyway. I'm just a lowly law student, with terrible grades. I have no shot at getting a big law firm position so I post on ATL to give myself a sense of worth.
Methinks a lot of DLA Piper associates have ATL to thank for a bunch of money coming back into their pockets.
Does anyone think the firm would have done this if it weren't for the firestorm of (bad) publicity?
To all stupid DLA associates: If your firm is paying you based on billable hours, do what every smart associate is doing at every other law firm: Pad your hours. If you get a research assignment that takes one hour to complete, bill twenty hours. If asked, just say, there were conflicting cases and complex issues that needed to be checked out. (NO partner is going to challenge an associate that produces billable hours in this economy). Plus, padding your timesheet will make you less likely to be laid off in this economy than other associates who are more honest!
An associate does not get paid to be a lawyer providing useful legal advice and services to clients. An associate gets paid to prepare a timesheet with a lot of billable hours. Pad, people, Pad!
To all stupid DLA associates: If your firm is paying you based on billable hours, do what every smart associate is doing at every other law firm: Pad your hours. If you get a research assignment that takes one hour to complete, bill twenty hours. If asked, just say, there were conflicting cases and complex issues that needed to be checked out. (NO partner is going to challenge an associate that produces billable hours in this economy). Plus, padding your timesheet will make you less likely to be laid off in this economy than other associates who are more honest!
An associate does not get paid to be a lawyer providing useful legal advice and services to clients. An associate gets paid to prepare a timesheet with a lot of billable hours. Pad, people, Pad!
19 - You could have at least put TTT in the name
Was the resume paper clogging up the office copiers?
#18 -- shut up -- you're either unoriginal (a.k.a. following the "Jimmy Carter is Dead" guy) or you're the same guy, which means you're a douche. Specter (that damn defector with no loyalty) is not dead.
It's hack firms like this that bring down the legal profession. Salary cuts are offensive, just fire the fat people and you should have more than enough room in the budget for Partner Retreats (and hookers)!
Is it just me, or is the QE guy a few cards short of a full deck?
--Hector Elizondo, Jr.
Arlen Specter. The new Abe Vigoda.
I just died a little inside.
Arlen Sphincter
Access to my balls is always performance based.
What's this QE thing?
eek
Is this ship sinking?
10 percent across the board pay cuts and stealth layoffs?
That sounds like an excellent business paradigm for law firms!
Wait till I tell my clients! After all, there are no other opportunities for associates to lateral to.
~A law firm consultant
The QE website took down the associate's profile... does that mean he was fired???
Horrible title. You SUCK, MysTTTal
What a bunch of clowns.
Give, take, give back, take back...
15 is spot-on.
Elie, DLA =/= Legal industry
DLA= A terribly flawed business model within the legal industry
Retired partner here: Looks to me like some partners went to bat for the associates who were carrying the load for those partners. A partner with a successul practice needs good worker bees, and good worker bees always can fly away. Even a small risk can send a big scare through a partner who is relying on a particular worker bee to handle important matters. There aren't all that many really good associates who a partner can truly count on, so when you find one, you certainly need to keep them happy.
37 - Exactly. They're a bunch of Indian givers. They have no reservations about doing it, either.
25, I heard the same thing about Specter. I didn't hear anything about Jimmy Carter though--did something happen to him?
39...
I believe you must be right. But "really good associates who a partner can truly count on" = SLAVE.
No one wants to be a slave, therefore I find it convincing that there are few of them.
Well done.
cutting salaries, no-offering a ton of summers, axing 1st years.
i think DLA takes over from Cadwalader as the worst firm to work for
no, LATHAM NY is the worst firm to work for
laid off the majority of first years, and 45% of associates in 2009
This is such a hck firm. Problem 1: they have so many people they can't make individual analysis, so bright line rules are needed; problem 2: they're idiots so they set bright line rules that produce horrible results; problem 3: they are so concerned with PR that they try and fix it with new bright line rules; problem 4: they obviously don't have enough $$ to cover their huge overhead (and clients aren't paying their over-inflated billing rates anymore), so they have to come up with new bright line rules. Problem 5: new bright line rules mean repeat steps at problem 1. Hence a firm in a death spiral. Why would any associate with any other opportunities stay/go there? Why would any partner with a portable book of business stay there? (let alone all the conflict problems of a firm that size) And why would any (smart) client bring its business there? (when there a ton of better firms with similar rates, and even more that will do a better job for less). None with any options would. This firm is in a death spiral. Poor management and sub-par lawyers do not a good firm make.
44 - Are you sure? That's the first time I've heard anything about that!
I for one am glad that DLA management responded to complaints (and, yes, bad publicity) and acknowledged that the initial salary cuts had been poorly administered. The change between 20% and 10% certainly makes a *huge* difference for me.
-- DLA first year
45...
Just to be clear, is DLA Piper in a death spiral?
Just to be clear, is DLA Piper in a death spiral?
"Essentially, the firm appears to be going to a plan where bonuses are entirely discretionary. "
Um, hello, that's what a bonus is! Get over it.
Are you the same girl who says "Just cuz we broke up doesn't mean we can't go out anymore?"
49 - you're wrong. Bonuses tied to hours targets aren't discretionary. Go back to your torts reading, schmuck.
What a fucking disaster in firm management. Proves that lawyers typically have zero business, or quanitative analytical skills, and that they couldn't predict the obvious imperfections in the new system.
As the WSJ reports, law firms need to train their managers how to manage. DLA is a joke.
http://online.wsj.com/article/SB124277243918636539.html#mod=djemPJ
DLgAy
What happened to Arlen Specter?
50, so if a firm said that it would pay bonuses tied to hours, but changed its mind and decided not to pay the bonuses, are you saying that the associates have some sort of claim against the firm? Just thinking out loud here, but is there some sort of promise and reliance claim under the Second Restatement of Contracts?
I'm wondering why all the associates are not suing the firms that changed their supposedly "non-discretionary" bonus policies at the end of 2008 for all of 2008.
What happened to Arlen Specter?
#12 has it right.
A bonus is exactly that - a bonus. Piper associates have a delusional sense of entitlement.
Can someone please post a link to or summarize Toobin's article on Justice Roberts in the New Yorker? I can't find any reference to it on this site.
Peter Devlin should have cut the salaries at Fish (beginning with all partners named Steve) and saved a few jobs.
44, check your numbers (AmLaw has a useful summary of % of associate layoffs). Also, other firms have laid off many if not most of their first years--e.g., Proskauer, where they started in September and were pink slipped in Novemeber, with at least 1 reported instance of an offer being entirely revoked when the individual deferred his start date to care for an ill family member. (Hope you had a nice Thanksgiving ,and have a Merry Christmas.) Latham isn't alone in its shabby treatment of first years and the incessant whining about your situation has both gotten tiresome and undermines the credibility of your efforts to paint the firm as unique in its heartless approach to layoffs. Either grow a set of balls and do something legally about it (estoppel, breach of implied covenant, fraud in the inducement, negligent misrepresentation, etc.), or move on.
DLA still sucks, but I knew they were going to have to go back on their plan to cut salaries. People were just too angry and it was too poorly thought out. The fact that they changed course so quickly shows they overplayed their hand. The partners thought they could use the economy to really screw over associates and found out that wasn't quite the case.
A performance-based compensation model makes sense so long as it's not a pretext for across-the-board compensation cuts. And at DLA, you can bet it is.
Setting up a prospective bonus plan that is transparent and reflects economic uncertainty would not be hard. In the Spring, a firm could create a grid with some measure of firm profitability on one axis (revenue per lawyer; profits per partner) and hours worked above a minimum threshold on the other axis. Then it could fill in the boxes with the resulting bonus under all of the potential outcomes.
So, for example, if revenue per lawyer is between 850,000 and 900,000 and an associate bills 2000-2099 hours, that associate would earn a bonus of xx. If revenue per lawyers dropped below a certain threshold, the bonus could be zero. The decision whether to adopt such a system rests solely on whether a firm views such transparency as good or bad, since current practice appears to be to wait until the likely year end profitability figure is known and then decide on the bonus numbers at billable hour intervals.
Phil Mickelson's wife, Amy, has been diagnosed with breast cancer. Please pray for a successful treatment and recovery.
61 - better than the current versions, for sure. But, if the lip service is to rewarding merit and value add, not just billable hours, then some more subjective allowance has to be made for. I know my 3rd year time per hour produces better product and value for the client when I'm running a deal, than the 4 hours of doc review a first year does while locked away in a closet. The client will tell you the same thing. I want this to be reflected in my comp.
Being in Michigan, I think it is interesting how the grievances of associate attorneys sound much like the grievances of the auto workers in terms of the sense of entitlement (albeit on a much grander scale).
Folks, the times they are a changing, and no one owes you anything, especially not in a time when the supply of corporate attorneys exceeds demand. In this environment, you should just be glad that you have a job, or at least a decent severance.
The effort to restore a sense of normalcy to the halls of DLA Piper is welcome, but serious damage has already been done.
The firm just revealed, unequivocally, that it does not value contributions to the firm outside of billable hours. There is now zero incentive for associates to invest in the summer program, business development or pro bono clients.
It's short sighted of the firm to reward only the billable hour for many reasons. It sadly incentivizes people to be less scrupulous about keeping accurate time. And it is also a huge deterrent to associates investing in other areas of firm life.
I feel bad for the recruiters, who are going to have a very hard time getting a single associate to be a mentor this year.
65 - What? Did you miss the part about pay cuts? Free lunches are plenty of incentive to take a SA out.
I hope many of you dissatisfied associates will consider federal govt employment. The work in my agency is wonderfully varied and interesting [and in endless supply], the autonomy is liberating, the hours are reasonable, and my colleagues/supervisors are learned. For some and maybe most, federal govt employment lacks sufficient prestige and perquisites, but it does offer certain compensations, including a "4 by 10" work week option, teleworking 2-4 days per week, $10k/year student loan forgiveness, commuting expense allowance, 4 weeks vacation [after 3yrs] per year, 13 sick days per year, training opportunities, annual merit pay, performance awards, promotion potential, generous retirement benefits, and, depending on experience, a six-figure salary. After five years, I'm at $140k in a federal agency in the midwest so we're obviously not talking BigLaw in terms of salary. Still, the pay is especially reasonable when you calculate it per hour worked. You can add $10k-50k per year if you choose to move into management which doesn't really interest me. And we will be hiring significantly over the next 12-18 months. Anyway, just a thought, best of luck if you decide to try the fed govt route. I highly recommend it.
DLA = R.I.P. I HOPE!!!
WHAT A FUC**ED UP PLACE. LOL.
57, here you go:
http://www.newyorker.com/reporting/2009/05/25/090525fa_fact_toobin
67,
How do you make your way into the federal government? I've been trying the last few months (USAJobs, etc.) without much success or response.
Laid Off DLA Associate
67,
How do you make your way into the federal government? I've been trying the last few months (USAJobs, etc.) without much success or response.
Laid Off DLA Associate
How much does Ellie make? Has his salary been cut yet?
I don't see what this has to do with layoffs at Cahill? Anyone?
The real catalyst for the give back was Sam Isaacson's fear of a bag of shit being hidden in his office.
Glad I was talked out of joining DLA...
Cutting salaries is so TTT. That's what bonuses are for, morons. Good year, good bonus. Bad year, no bonus. The only firms cutting salaries now are the ones that couldn't afford them in the first place. TTTs.
What person with any options at all would choose to work for a firm that uses employee salaries as a buffer for economic downturns?
Exactly.
And these idiots can't even get their idiocy right the first time.
DLA=TTT
Elie - grow a brain before trying to type. I don't care so much about your typos but this heading is not even close to accurate. "DLA Piper Gives Back 10% of the Salary Cut" implies that a person who got a $20,000 cut is now cut $18,000...which is dead wrong and probably explains why you're blogging rather than practicing.
In breaking news, DLA advised its worldwide photocopy center employees they henceforth will have to pay for 50% of all copy paper used in firm copy jobs.
76 -- Right on. Exactly.
76 -- Right on. Exactly.