Nationwide Salary Cut Watch: Reed Smith Cuts Current (and Incoming) Associate Salaries

Since December, Reed Smith has fired 215 people. So the latest news from the firm won’t be all that surprising. This morning, Reed Smith managing partner Greg Jordan sent the following message to the firm’s associates:

Over the past several months, Reed Smith has adopted many changes to our business in response to global economic conditions, changing client demands, and the competitive landscape in the legal industry. Among other things, this has meant lower compensation levels for partners. Today, we are announcing another change which we believe is appropriate to further sound business operations. Effective July 1, 2009, we will reduce associate salaries in the U.S. by 10% across the board.

What is marginally more surprising is the news about Reed Smith’s incoming first-year associates:

We will set the salaries for our incoming class of U.S. associates at a later date, but the new salaries will be at least 10% lower than current first year levels.

As The Dude might say, “That’s a real bummer, man.”
Our informal numbers tell us that fewer than twenty AmLaw 200 firms have cut associate salaries outright (this does not include the numerous firms that have frozen associate salaries). That’s not the best news, but we haven’t reached epidemic levels. Not yet.
Read the full Reed Smith memo after the jump.


REED SMITH — MEMORANDUM — SALARY CUTS
Over the past several months, Reed Smith has adopted many changes to our business in response to global economic conditions, changing client demands, and the competitive landscape in the legal industry. Among other things, this has meant lower compensation levels for partners. Today, we are announcing another change which we believe is appropriate to further sound business operations. Effective July 1, 2009, we will reduce associate salaries in the U.S. by 10% across the board. We will set the salaries for our incoming class of U.S. associates at a later date, but the new salaries will be at least 10% lower than current first year levels. In our European and Middle Eastern offices, we will freeze current associate salaries, and we will set the starting salary for newly qualified UK associates approximately 10% lower than the current NQ level. Asian operations are not affected by this action. The associate bonus program will remain unchanged in 2009, and we will use it to continue to reward strong performance.
We appreciate your understanding of the importance of adapting our business to the current environment. In the next few days, we will schedule an associates video conference meeting and open forum to discuss this action and give you an opportunity to ask questions. In the meantime, please do not hesitate to contact your Practice Group Leader or Office Managing Partner if you have questions. Thanks.
Earlier: Nationwide Layoff Watch: Reed Smith Cuts Associates & Staff
Prior ATL coverage of salary cuts

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