Reed Smith is a law firm.

This strikes me as not enough. Firms need to be making deeper cuts to junior associate salaries.

Did they Latham their first years? Elie, why aren't you tracking this?

@1 It is happening everywhere, you are just too stupid to know where to look.

1 - yes, it's legal and yes it's happening in many other industries.

1- Piling on. I know for a fact Honeywell International and Rockwell Automation have each reduced comp by at least 10% for most of their employees. I think Johnson Controls may have, but haven't confirmed it.

Is Reed Smith a real law firm?

if leading firms were going to cut salaries, they would have done so by now. It's too late to do it at this point - the recession is on the upswing and firms know that. While business hasn't picked up, it is going to, and firms that go below the 160 mark are going to do long-term damage to their reputation and their ability to recruit top students.

Solution:

1. Kill 3rd year of law school. Replace with Internship teaching practical lawyering skills. (also kill the rising cost of a legal education so were not 120-200 in debt after 3 yrs)

2. Make first 1-2 years in a firm an 'apprenticeship' where 1st years are trained and not held to billable hour requirement (also paid 100K)

3. After year 1 bump salaries and allow 2nd years to begin to do substantive work. After year 2 bump salaries more and allow 3rd years to actual begin practicing.

Boom. Magic.

Pls Handle Thx.

- Ray S. Ipsa

Ballard Spahr is next.

1 - Here is an article from January. The salary cut trend has only gained momentum since then.

http://money.cnn.com/2009/01/07/news/economy/salary_cuts/index.htm

#1 are you that young and naive? Other industries are nut just cutting salaries but they are firing people by the thousands. Not just auto workers at GM and Chrysler but skilled workers at Microsoft , AMEX and other major corporations. I understand many young attorneys and law students have only known a time of prosperity and ever increasing salaries but you need to shake the sense of entitlement and start looking at your position relative to the wider world and history. A pay cut or layoff is tough but it's time to quit the "how dare they do this to me" routine. You don't want to be fired or have your salary cut start your own firm. Until then be thankful for what you have and pray to ride out this down cycle in good shape.

Is Reed Smith even a real law firm?

Look at all these hacks! When will they figure it out. Don't reduce salaries...just trim the fat, literally! Dump the fat people, and keep the salaries up there.

On an even more serious note..Phil Mickelson's wife, Amy, has been diagnosed with Breast Cancer. Please pray for a successful treatment and recovery.

5 and 6 you are both wrong. It is reasonable for employees to rely on earning at least the same pay for the same work performed, thus across-the-board salary cuts are rare because of the employers' potential liability for detrimental reliance claims. Blanket salary cuts would only be OK if accompanied by other consideration to the emplyoees, such as a corresponding reduction in work hours.

"That's not the best news, but we haven't reached epidemic levels. Not yet."

Clear cut evidence that ATL is not helping associates anymore. This site wants salary cuts to reach "epidemic levels" so Lat and Elie can line their pockets. They create and profit off of panic. ATL, you are providing law firms with justifications to screw associates.

Elie's too easy of a target (pathetic, fat POS). But Lat? What the hell is wrong with you.

ATL readers revolt!

16 - You are wrong (in the absence of an employment contract). Most legal employment is "at will." Either party can end the arrangement at any time, for any reason.

So if you don't take the reduced pay, then the firm gives you your walking papers.

Reed Smith's PPP are under $1mil and their RPL is only ~$600k. It'll be interesting to see if any of the firms with $2mil+ PPP and RPL closer to a million decide to follow.

DEFLATION

17 - They aren't providing "justification" for anything. They are just reporting what is happening in the legal profession (just as they reported on the happy news back in 2006 / 2007).

I outsource all my legal work to Arrakis. I hired a Fremen who is willing to work 18 hours a day and all I had to give him was my bathroom waste and a backwashed soda.

18 - there is a difference between breach of contract (which presupposes the existence of an enforceable contract) and detrimental reliance (which results in the enforcement of a promise in the absence of a contract). There are plenty of threads here discussing this important distinction.

- 16

10- agreed. see the Drinker Biddle post from last week.

I expect the salary reductions to continue. Some firms will do it because they are in dire straits but even more firms will do it to roll back the move to the $160k scale. Many firms jumped on the $160k bandwagon. That raise, the second industry wide raise in one year, never sat well with partner and other players in the industry. The managing partner at the firm in TX that reduced salaries a few weeks ago is the only one with the balls to say "this never made sense for our firm and we are now fixing it." Almost every other firm would rather hide behind the bad economy. The reductions, like the deferred start dates, will spread whether economically justified or not.

How can you have justifiable reliance in a situation where your employment is at will, meaning that they can fire you whenever they want, for whatever reason?

Perhaps an entire post questioning the premise that every firm is cutting salaries would be appropriate? I fear we have all fueled the pandemic. To justify a salary freeze at my firm, we were all told to look on the bright side, because they weren't cutting our salaries like "so many other firms are doing."

Well, it's not "many other firms." As you cite, apparently it's about 20. That's only 10% of Am Law 200, which is not very much.

Let's stop the avalanche. I am tired of being told that even though I am way over my hours, and bringing tons of money for the partners, that I should consider myself lucky my salary hasn't been cut.

I'm a deferred incoming associate (Jan. 2010).

I've thought for a long time that there is a 50/50 chance (or possibly even less) that I would ever set foot in the firm. I admit this still may be the case. (Please don't jump all over me...I'm being realistic about this, and I don't feel "entitled" to anything). I've already begun to prepare myself for the worst by looking into other industries that would value a J.D. (All of us 2009's should be doing this btw).

However, is it possible that firms looking to reduce associate salaries for the next 3-5 years or more would take advantage of an incoming class with absolutely zero bargaining power? What I mean is, if the firms can pay us 100k (which I would happily accept), providing them the opportunity to completely restructure the payscale....wouldn't that be an attractive option? Imagine the next three incoming class years starting at 100k. 160k would be the salary for 3rd or 4th years, let's say.

Please advise.

The coolest girl in my JD class is going to Reed Smith. Sucks she got a pay cut, but eh, what can you do? Tomato potahto.

26 is correct. If this "detrimental reliance" theory were correct - which it is not - then laid-off associates could sue their former employers, arguing that they relied upon the prospect of continued employment.

Think of it this way. Does it make any sense for associates who get to keep their jobs, albeit at reduced pay, to have greater legal rights than associates who get laid off?

I am on the executive committee of a major law firm and I can confirm that the big law firings are just beginning. We will see wholesale dissolutions of practice groups and firings of 1/3 of the firm become the norm in a few months. Just wait and see.

Top flight firms have clearly decided against salary cuts.

Only trash firms with mediocre talent that were pretending to be BigLaw have had to resort to salary cuts.

Considering that Thompson Hine was one of the very first firms to cut salaries (and has been doing layoffs), it's pretty obvious that the firm is in pretty bad shape.

The partners just went through lease negotiations for the Dayton, Ohio office. I'll bet my next paycheck that the new lease is very short term and likely includes a termination option. I think those of us at the Dayton office should be very worried. That's a fast way to cut a lot of overhead, and, let's face it, the Dayton office is dead slow, isn't a profit center for the firm, and makes no sense whatsoever in the context of a supposedly "national" firm.

I think comment 10 is on to something. Although, this argument has been presented before. It still makes sense.

And what about the end, Peter? Is there light at the end of the tunnel?

It’s not going to be over before the end of the year. I think you’re going to see dramatically reduced offers to summer associates at the end of this summer, and dramatically reduced offers for people to come in as summers in 2010. These cuts could be very dramatic, as much as slashed by 90 percent.

What? 90 percent?

It could be. The firms are still way over capacity. I think at a lot of firms, the work has stabilized, but it’s stabilized at a low level and managements still haven’t yet corrected to that level.

Not a good time to be coming out of law school, is it?

It’s not. But it’s really not a good time to be a 2L. They’re going to get hit the worst, I think.

This promissory estoppel / detrimental reliance / Section 90 issue has already been discussed:

http://abovethelaw.com/2009/04/maybe_deferred_or_laid_off_ass.php

26 and 30: You might want to take a look at Section 90 of the Restatement. You'll see that there's a viable claim here based on reliance. This isn't an "employment contract" theory, it's reasonable reliance on a promise to hire you and pay you a particular salary--hence, prommissory estoppel.

"Many courts have held that there was no cause of action for breach of an employment contract because the employment would have been terminable at any time by any party and refused to find the situation where a party was terminated, or an offer of employment revoked, before employment was commenced different from the situation where an employee began work and was terminated after the first day."

"Many of these courts found that, in order to allow recovery based on breach of a contract of employment for an indefinite hiring, there would have to be an exception to the employment-at-will doctrine present, such as consideration in exchange for the promise of employment or other "distinguishing features," and generally rejected the argument that quitting prior employment, and other acts the employee took in reliance on the offer of employment, constituted additional consideration or distinguishing features."

http://www.volokh.com/posts/1240347717.shtml

K & L Gates follows in 5.... 4.....

Reed Smith is not a real law firm.

Law students this is how you should pick your first firm:

1) Imagine the most powerful person you know.

2) Then imagine that person in a legal mess (hostile takeover, sexual harassment lawsuit, bet the company patent infringement case, etc.)

3) Now imagine that person frantically trying to get their outside counsel on the phone.

Repeat that scenario with any firms you have acceptance letters from, the most plausible one is the firm you should go with.

36 -- it is not. it is called employment at will. there is no claim. learn a little bit about employment law and get back to us.

There was no REASONABLE or JUSTIFIABLE reliance.

This recession began in late 2007. Once 2008 started, all best were off.

I am in the corporate group of major law firm. I have had maybe 100 billable hours in 2009 - mostly to tie up loose ends from mid-2008 deals. This is typical for the group. The partners I used to be friendly with avoid eye contact with the associates. This does not bode well. I’ve got my resume out there - at every law firm and government agencyand alternative career position out there, and there are no takers. I went to a top 10 school and did journal work. Not good people, not good.

41 here. I meant to write "all bets were off," not "all best were off." Sorry for the TTTypo.

37 addresses a "breach of a contract of employment for an indefinite hiring." We're talking about promissory estoppel here. It is perfectly foreseeable by law firms that those to whom they extend offers of employment will relocate to a certain city, sign a certain lease, etc., in reliance on receiving the offered job at the offered salary. It's that foreseeability that creates liability on the part of the law firms. So, 40 and 41, thus endeth the lesson.

Anyone stupid enough to rely on a Thompson Hine partner keeping their word gets exactly what they deserve.

I'm betting they aren't giving us any information because they already know there are more layoffs/paycuts coming down the pike.

Dayton office has been a dead end for years. Atlanta is suffering because its been half-assed and mismanaged since its launch.

Folks, it’s going to be worse than predicted, a lot worse. Fewer and fewer will survive, more and more will make less and less, and the best and brightest will find something else to do. Partners don’t like taking pay cuts, particularly the ones who generate the business, so you can expect a whole lot of other folks to give it up so the rainmakers and firm politicians can achieve their financial expectations.

44 - these issues are not new or unique to law firms. there is no claim here. employment is at will meaning your employer can fire you (or rollback your salary) for any legal reason.

There is no monolithic "biglaw" anymore unfortunately. Just the 10-20 elite firms that can afford to pay 160k starting salaries and lockstep, and the rest. All the HYS grads will go to those elite firms (and those elite firms will never need to hire from non-top 14 law schools again) and the division among those firms and the rest will become even clearer. Clients who can pay the big money will go to the elite firms even more because that's where the "talent" is going. Wonder how happy all these TTT firms will be about that in a couple years....

47,

That doesn't sound right to me... I've been reading the Restatement Second (I think section 90), and it sounds like there is a good claim there.

We're really going to need you to cite some sort of legal precedent supporting your... *ahem*... interesting position on the well established Restatement position.

-Someone that Actually Attended Contracts Class

I challenge all the commenters claiming promissory estoppel to provide links / citations to current cases that support their views.

As counsel to the "plaintiff," the burden is on YOU to establish liability. That is why we (those of us with brains) don't have to provide cites to support our (correct) position that THERE IS NO CLAIM.

47: 44 et al. might have a point. Firms that offer employment KNOW that people take certain steps in reliance on the offer. In other words, such reliance is foreseeable. And, because the offeree knows that the firm foresees the reliance, then the reliance is reasonable. It isn't a legal issue, it's an equitable one, and that's the basis for the claim.

50,

Sorry, we've already cited the Restatement Second. We've shifted the burden of persuasion to you. You need to cite superior authority to the contrary.

Plus, per post 49, we also asked first.

Hey 49 -- I haven't been in contracts class in years. I've been practicing actual employment litigation. Regardless of what the restatement is saying about contract law -- there is no employment contract here. Again, employment is at will in the absence of an employment contract. So, what the restatement is telling you about contract law doesn't apply. As for your citation, there is copious amounts of legal writing on this issue in every jurisdiction. Maybe spend some time attending employment litigation class. Good luck to you.

correct me if I'm wrong here, it's been a long time since Contracts...but I thought, even if you had a valid justifiable reliance claim, you are only entitled to out-of-pockets costs stemming from your reliance. NOT your expectation interest (i.e. future pay, etc.). So the associate that moves to a certain city, signs a lease, etc. will be paid back those costs, but isn't entitled to keep the job (which is specific performance anyway and rarely granted in an employment context), or entitled to future pay (because employment was at-will).

52 is right. 50 needs to provide a supporting citation because (1) the burden of persuasion has been shifted to the "no estoppel" side because of citation to the well established Restatement Second; and (2) post 49 has dibs.

Or save yourself the time and wasted Westlaw and just admit that it is a textbook Promissory Estoppel claim!

-Attending Contracts Does Help!

RS has been in bad shape for quite some time. They've been engaged in stealth and open layoffs. The merger with the London firm has not gone well - the folks in Pittsburgh were surprised that the 200+ lawyers in London (now the largest RS office) had their own way of doing things and aren't happy about the PPP hit they're taking. RS has made major staff cuts - to the point that it effects the ability to provide work for the clients. Plus RS is getting ready to close the Richmond and Leesburgh VA offices.

Get out while (if) you can - this ship be sinking.

1, you are a complete idiot. You are just another self-entitled law student who complains about your six figure salary without proving a single iota of work like the rest of the cry-baby brats on this site. People get salaries reduced, they get fired, and they even do a higher caliber of legal work for much less money. Get a grip on reality.

31 & others :

I am also skeptical about any forecasts that claim the economy will recover soon or that when it does, that the "good ole days" will return.

I assume the market for securitized transactions is still effectively comatose. These transactions recently accounted for approximately 44% of the financings. From what I've read, very few if any new deals are on the table.

Bank lending stats are a little more difficult to get a grasp on but I believe new bank loans are also off substantially.

What percentage decrease are you all seeing in lending/securitizated transactions now as compared to a year ago.

Please include the size (Vault 20, 50 100, 200) as this may be helpful in confirming how widespread the problems still remain.

Like No. 31, I believe the worse probably still remains (and hope I'm wrong).

53 and 54,

Hate to tell you, but "random person on the internet says so" is not a citation with more authority than the authoritative and well established Restatement Second.

If you have so much "experience" practicing "actual law", then you should be very familiar with the need to provide supporting citations!

Thanks guys, you made my day!

- 16/23

Through number 47, this post has drawn in an exceptionally by a high percentage of promissory estoppel flames - well played.

I agree with 50 that those who agree that there is a promissory estoppel claim here have already cited Section 90 and need cite nothing else. But, there is ample authority out there supporting such claims, including a case decided just two months ago holding that the claim survives summary judgment. See Shair v. Qatar Islamic Bank, No. 08-1060, 2009 WL 691249, at *5 (N.D. Ill. March 16, 2009).

I cannot for the life of me figure out what is happening to this ship

53,

Promissory estoppel ONLY applies when there is no contract.

Wow, you must be a very successful "lawyer" practicing "actual" business litigation (as opposed to others in your office that just pretend???), if you don't even know when promissory estoppel applies.

We've provided a citation. All you've done so far is conclusively establish that you don't even know what Promissory Estoppel is...

-49

28 -

It's possible, but unlikely. The economy is down. A lot of the commenters here believe that there has been a fundamental economic shift that will permanently reduce the demand for the legal services that most firms are geared to provide. If they are right, then expect law jobs and salaries to decrease until a new equilibrium is reached. Is that 100k for an incoming first year? Got me.

Of course, most of the commenters on ATL (and probably you) haven't worked long enough to have survived post-internet-bubble downturn, let alone the last real recession the country faced. Some money-makers aren't coming back or at least not any time soon (like making mortgage-backed securities with friends at Lehman), but the economy will eventually pick up, and demand for BigLaw services (and incoming first years) will rise again. At that point, lawyers (incoming first-years) will again have enough market power to drive associate salaries well above $100k. That to say, you really have to have an Obama-negative outlook on the economy to believe there would be a three year period where all incoming classes make only $100k.

I agree with 59 -- Restatement (Second) Torts, sec 90 is followed in nearly every State jurisdiction, including New York and Pennsylvania.

Critically, under promissory estoppel, Reed Smith associates cannot get expectation damages (i.e. the difference between their old and new salaries), but they can recover expenses occurred in reasonable reliance on their old salary rate, e.g., a five-year fixed mortgage budgeted under the old salary scale.

I agree with 59 -- Restatement (Second) Torts, sec 90 is followed in nearly every State jurisdiction, including New York and Pennsylvania.

Critically, under promissory estoppel, Reed Smith associates cannot get expectation damages (i.e. the difference between their old and new salaries), but they can recover expenses occurred in reasonable reliance on their old salary rate, e.g., a five-year fixed mortgage budgeted under the old salary scale.

Hahahaha! We actually got 62 to waste his time trying to find a citation. And an off-topic citation at that (very weak).

I just read that case and it is off point and the tangential connection to the actual topic at hand is nothing but dicta!

62, if you had a leg to stand on you'd just cite the language from your "case", instead of providing a blank cite and expecting people to take your word for it.

Unfortunately for you, my firm is shitty and has no work, so it was quick and easy for me to look up the case and see what a bluff move that is. Where's the language you are supposedly relying on?

YOU ARE ALL IDIOTS

Skadden Sinecure

The R90 flamers have torched this post.

Well done.

Re 62, promissory estoppel claims based on promised performance are alive and well despite the "employment at will" doctrine, at least in Louisiana: Bains v. Young Men's Christian Ass'n of Greater New Orleans, 969 So. 2d 646, 652 (La. App. 2007). Take that, promisorry-estoppel deniers.

71,

WTF?!? You obviously didn't read his case because it is directly on point and clearly SUPPORTS the promissory estoppel theory!

Don't be a lazy sack of crap like the section 90 deniers! We don't need those tactics because we happen to actually be CORRECT!

54 here. I thought I was asking a fairly basic question of contract law. I don't have my contracts book with me at the office but I thought that damages for reliance is usually out-of-pocket. But here are some citations if you absolutely need them:

[A] promissory estoppel claim does not necessarily give rise to the full range of damages of an ordinary breach of contract claim; rather, “[t]he remedy granted for breach may be limited as justice requires.”

School-Link Technologies, Inc. v. Applied Resources, Inc., 471 F.Supp.2d 1101 (D. Kan. 2007)

The usual measure of damages under a theory of promissory estoppel is the loss incurred by the promisee in reasonable reliance on the promise, or ‘reliance damages.’ Reliance damages are relatively easy to determine, whereas the determination of ‘expectation’ or ‘benefit of the bargain’ damages available in a contract action requires more detailed proof of the terms of the contract.”

Garwood Packaging, Inc. v. Allen & Co., Inc.,
378 F.3d 698, (7th. Cir. 2004)

Now, as a practicing lawyer, I need to get back to work.

Reed Smith already essentially froze salaries last year (although a few associates got a 5K or 10K bump, which allowed them to officially state they did not freeze salaries). Thus, associates are currently not making the target salary for their class year. (this means 2nd year associates in NY are currently making 160-165K, 3rd years are making 185-190K, and 4th years are making 200-205K). With this salary cut, 3rd year associates will now be making about $166K. While this is still a pretty penny, it will be interesting to see what the firm does in January 2010. Will associates be placed back on the salary track (albeit an adjusted track), or will salaries still be essentially frozen?

74 -- YOU ARE WRONG TO CITE A CIVIL LAW JURISDICTION (LA) WHEN WE ARE DISCUSSING A COMMON LAW DOCTRINE. DID YOU EVEN GO TO LAW SCHOOL I REPEAT DID YOU EVEN GO TO LAW SCHOOL MY GOD

74 -- YOU ARE WRONG TO CITE A CIVIL LAW JURISDICTION (LA) WHEN WE ARE DISCUSSING A COMMON LAW DOCTRINE. DID YOU EVEN GO TO LAW SCHOOL I REPEAT DID YOU EVEN GO TO LAW SCHOOL MY GOD

An employee's claim that an employer promised to leave him $1 million in his will as inducement to get him to work raises a valid promissory estoppel claim, according to a recent decision from the U.S. District Court of the Western District of Kentucky.
Owsley Brown Frazier, a wealthy collector of historic firearms, regularly bought guns over the years from dealer Michael Salisbury. On these sales Salisbury charged Frazier a commission, which Frazier later denied he had agreed to. A few years into the relationship, Frazier decided to found the Frazier Historical Arms Museum in Louisville, which is home to such items as Sir Philip Sidney’s helmet, Geronimo’s bow, and George Washington’s rifle. He hired Salisbury to be the director, promising him $100,000 a year, and agreeing to leave him $1 million in Frazier’s will. Salisbury acquired many more items for the museum, collecting a commission on each one. When Frazier learned of the commissions, he fired Salisbury, and sued. Salisbury raised a number of counter-claims, including breach of contract and promissory estoppel.
Salisbury's contract counterclaims must be dismissed, wrote Judge John Heyburn II, applying Kentucky law, because no employment term was ever specified. Thus there was no breach by Frazier even if Salisbury’s assertion that he’s entitled to the commissions is true, because he actually received the commissions. But the promissory estoppel claim -- that he went to work in reliance on the promise to leave him $1 million -- was sufficient at least to survive a motion for summary judgment.
Frazier v. Salisbury, 2005 U.S. Dist. LEXIS 11219 (W.D. Ky, June 8, 2005).

RS is still a great firm to work for and I highly doubt associates would leave over something like this. I don't think any associates are suprised about these cuts....rather, we were waiting for it to finally happen. It it spares some additional layoffs then it is good news to me!

54 here. I thought I was asking a fairly basic question of contract law. I don't have my contracts book with me at the office but I thought that damages for reliance is usually out-of-pocket. But here are some citations if you absolutely need them:

[A] promissory estoppel claim does not necessarily give rise to the full range of damages of an ordinary breach of contract claim; rather, “[t]he remedy granted for breach may be limited as justice requires.”

School-Link Technologies, Inc. v. Applied Resources, Inc., 471 F.Supp.2d 1101 (D. Kan. 2007)

The usual measure of damages under a theory of promissory estoppel is the loss incurred by the promisee in reasonable reliance on the promise, or ‘reliance damages.’ Reliance damages are relatively easy to determine, whereas the determination of ‘expectation’ or ‘benefit of the bargain’ damages available in a contract action requires more detailed proof of the terms of the contract.”

Garwood Packaging, Inc. v. Allen & Co., Inc.,
378 F.3d 698, (7th. Cir. 2004)

Now, as a practicing lawyer, I need to get back to work.

71, the langauge at *5: "Moreover, the letter contains a specific promise to pay Shair $10,000 per month until his confirmation occurred. Thus, even if confirmation never occurred, Shair could still assert a claim for promissory estoppel." And exposing a promissory-estoppel denier is never a waste of time.
--62

76,

Just to be clear, you are AGREEING that promissory estoppel is applicable here, but your point is as to how damages are determined?

Plus, typically TLT students turn down other job offers in order to accept one, so their reliance damages would be essentially the same as benefit of the bargain damages. The amount you would have earned at the firm you turned down is about equal to what you would have earned at the firm that withdrew your offer. Thus, still big $$$

66 - 70

They aren't entitled to shit! Good luck with that claim, btw.

78,

Glad to see Reed Smith partners and HR on ATL to comment about what "good news" these pay cuts are.

It's strange, though, every one of my fellow associates I've talked to thinks it is COMPLETE BULLSHIT that is due to partner incompetence.

Absent a contract, employers are generally free to cut your pay however much they wish, so long as it's not done retroactively. They don't even have to get your permission to do so and, if you leave, in many states you aren't entitled to unemployment compensation because you weren't terminated.

Um, 75/76 (congratulations on the duplicate post, BTW), we are discussing the viability of a claim, not a "common law doctrine" in the abstract. The case says that (common-law) promissory estoppel claims may be brought in Louisiana despite the (there, statutory) employment-at-will doctrine. Thanks for playing, though.

84/85,

Again citing to the venerable source of "random guy says so on internet".

Pretend you're a judge. What is more convincing, the Restatement 90, or random internet guy?

Epic fail. You lose.

REED SMITH, HOW CAN YOU CUT SALARIES BY 10% WHEN I AM ALREADY MAKING 10% LESS THAN I AM SUPPOSED TO?

I am a second year making $160K, who will now be pushed down to $144, which is less than most first years.

We accepted salary freezes to be team players, but this really hurts. It is more like a 20% pay cut combined.

I would have preferred more layoffs.

Most moronic comment thread, ever.

- Comicbookguy

87,

Be glad you aren't at Thompson Hine, then!

Thompson Hine - Paycuts? Layoffs? Why choose when you can have both!?!

I think minimum wage is about right for a first year associate. They know nothing, can do nothing, and accomplish nothing. So what's wrong with minimum wage?

85 - NO YOU ARE WRONG BECAUSE AT COMMON LAW YOU HAVE TO HAVE CITATIONS AND YOU HAVE NONE. THAT IS WHAT COMMON LAW IS. WE ARE DISCUSSING BOTH THE CONCRETE APPLICABILITY OF PROMISSORY ESTOPPEL TO THIS CASE AS WELL AS THE VIABILITY OF THE DOCTRINE YOU CANNOT SEPARATE THE TWO.

Also, thank you for congratulating me on the double post. BUT IF POSTING TWICE IS THE PRICE OF REVEALING YOUR IDIOCY, I WILL GLADLY PAY IT.

Your idiocy, or his? Idiot.

We're nearly 100 comments in and no one used Reed SmiTTTh yet? My balls are disappointed in you.

People are getting trolled hard in here.

Although not a peer firm, RS deserves honorable mention for adopting my "hybrid tough love" package. RS's management will see the positive results from their simultaneous layoffs (which will instill fear in their current workforce) and salary reductions (which will make current malcontents appreciate the little they have). Now if only the management committee at my firm adopts the hybrid tough love, everything will be splendid.

Go Rangers!

I work in the copy center and mail room of a major law firm. I can confirm that the price of copies and postage will continue to go up. In fact, I am positive that we have not seen the worst of copy and postage price increases, which should hit in the 3rd/4th quarter of 2009.

Reed Smith is actually worse than Salusa Secundus.

Well done.

A/A-. Great work all around.

why the hell did i ever go to law school. i can't stand a single one of you assholes.

UNEMPLOYMENT RATES RISE

SALARIES FALL

PROMISSORY ESTOPPEL REMAINS

Guys in my high school used to get a B- in Contracts all the time, it was no big deal. Until OCI the following fall, when they realized that all that arguing about biglaw salaries had been purely academic.

WGWAG STUD

97

You are right. Postage stamp costs are what will sink hitherto thought invincible law firms.

Dumbass.

O'Melveny is next... mark my words.

How much does Ellie make? Has his salary been cut yet?

The ship be sinking...

Wow - I just hope that when I get out of law school, somebody will hire me. I would gladly take a job with Reed Smith.

Wow - I just hope that when I get out of law school, somebody will hire me. I would gladly take a job with Reed Smith.

I'm glad PE is back. I'm not sure why, but I am.

I thought Reed Smith went under?

Reed Smith second-year here. I welcome this pay cut and hope for more to come. Please sir may I have another! RS to $80K!!!!

You're welcome!

This firm is going to go under. It's an absolute TTT in rapid decline at this point. I think we all understand that associates get the punishment before the partners, but Reed SmiTTTh has been taking that to a whole new level.

What a dumpster.

I had to write a brief on the issue of reduction of salary for an at-will employee. I found dozens of cases rejecting reliance claims. The uniform reasoning of the cases was that if the employer can fire you they can certainly pay you less. Alternatively, the courts' held there is no need for the formality of the company firing you first, then offering you your job back for the reduced salary amount.

As an associate who is cautiously optimistic that his pay won't be cut, but still fearful it will be, I certainly wish the posters who were making the reliance/estoppel argument were right. Maybe then I would have less to fear. What you guys are missing ist that the courts' aren't ruling there isn't reliance. There IS reliance for all the mortgage/rent reasons etc. that you mention. However, that reliance is NOT JUSTIFIABLE. NY courts routinely hold you cannot JUSTIFIABLY rely on the conditions of your employment being unchanged when you have agreed to permit your employer to fire you whenever they want for any reason or no reason whatsoever.

The litigation groups of Reed Smith have been very profitable to date and continue to be very busy....it makes no sense that these associates should be punished. They are billing a lot of hours! absolutely crazy and unfair.

115- Yeah, I agree, they should have just cut salaries of the transactional attorneys. Kinda like they only laid off transactional attorneys. All the litigators are super stars.

114=promissory estoppel denier. Your position has been repeatedly refuted in the comments of this and many other threads. It is no longer worth addressing.
(See Section 90 of the Restatement, though.)

115 - There is a certain amount of unfairness to it, to be sure. There are associates generating significant revenue beyond their comp, and associates who aren't. The problem is that if you want to keep the star resources that aren't (due to the downturn in their practice areas), then something has to give.
At the end of the year, it will be interesting to see what the firm profits are, because those define what the (equity) partners get paid, and how much gets kicked back in bonuses.

Any aTTTorney can do doc review.

Things seem slow, very slow, @ Proskauer these days. No specific rumors, but something could be in the works.

RS has been in bad shape for quite some time. They've been engaged in stealth and open layoffs. The merger with the London firm has not gone well - the folks in Pittsburgh were surprised that the 200+ lawyers in London (now the largest RS office) had their own way of doing things and aren't happy about the PPP hit they're taking. RS has made major staff cuts - to the point that it effects the ability to provide work for the clients. Plus RS is getting ready to close the Richmond and Leesburgh VA offices.

Get out while (if) you can - this ship be sinking

121 = full of sh*TTT
RS is doing very well, thank you.

122 = RS shill/troll...

122 = RS shill/troll...

122 = RS shill/troll...

122 = deluded RS ASSociaTTTe.

firms doing "very well" don't institute across the board salary cuts, layoffs, office closings & plunging PPP.

122 = RS shill/troll...

123, 124 and 125 = doc review monkey

128=abject retard

129 = in denial. Why aren't you billing hours!!! ??? Seriously, no wonder RS cut your salary.

Of course restatement section 90 applies. Try reading the comments to the section (like we did in my contracts class), not just the section itself, and you will understand.

83 - if you don't like it...leave.

The Dude never said "That's a real bummer, man."

It was simply "That's a bummer, man."

Let's get straight the important facts in this post, okay?

Very good research summary 114. Thanks. Curious about your background (class year, etc.), if you can offer some of it without compromising your identity.

Any firm that cuts salaries will be recognized as a second- or third-tier firm when the legal market improves, and will be damning itself to mediocrity.

126 - Y'all can say what you want, but like almost all other Firms some RS practice areas are going strong, some aren't.
Plunging PPP? I don't where you're getting your facts, but last years PPP didn't plunge (yes, it was down, but not by much), and with the associate comp reduction, I would expect that PPP won't "plunge" this year, either. Comp for everyone else? Plunge might be the right word.

where are these office closing I keep hearing about? Don't see them personally.

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.

So what are the odds that the class of 2009 will start this January? 50%? 25%?

10%...wait 9.9%

8 -- No

Kilpatrick closing London office -- it looks like they're a firm in trouble -- often rumored to be headed the way of Pogo the dodo bird

87 -- is a douche who should be counting their blessings that they were able to get a job at a firm that was willing to pay that rate even though they are an also ran firm... The reality is that you got lucky to enjoy a little bit of the bubble and now you are going to have to deal with the reality that you're with a second/third tier firm in a third tier (or worse city) -- and are still being overpaid for your skill set and market. You are at least making more than your accounting/consulting friends and your mommy and daddy think you are with that big, prestigious firm (although you will need to reconcile the truth in your own gut and learn to live with it) -- fact is unless you ever land a whale of a client the top tier will be closed to you and yes even some of those firms will not even take you, because they would view you as soiled and a blow to their standards/brand. So get over it and feel lucky that you got what you got to date and hope that you can lateral at some later date to the top tier by generating a lot of originations ( highly unlikely. but you can dare to dream). Now get back to proofing my redline and reviewing those docs for the privilege log or data room.

Wow. the R90 trolls have gone double platinum. We even have arguments about the authority of LA law. BTW, are there any lawyers on this blog or just 1Ls? Its fun and all, but I might like some disussion of the point raised about securitization deal flow. Stuff like that matters to people who practice, however dull it may be.

Associates need to learn to adapt to the real world (as do many partners). For clients, the value of legal services is tied to the value of the transaction/context in which they are used. The economy is down, transactions are down, and clients are less profitable. Thus, the value of legalservice is down, but the supply of available lawyers has not shrunk, thus there are two pressures driving down attorney income. "partner income" is a myth - at least the published numbers - most firms have been driven to an artificial construct where they create non-equity partners, of counsel, other special titles, primarily solely for the purpose of excluding attorneys from the "profits per partner" calculation - thus enabling firms to maintain or drive up an artifical number so that they "look good."

In reality, lawyers are independant professionals, and your real value in the long run is your "business base" - the clients (or staff at clients) who appreciate your work and send you work. If you are a lawyer without a substantial base of business (most firms call this "responsible attorney") of at least a million a year (and this should be a sustainable average over 5+ years), then you really are an associate, regardless of title, since you are dependant upon others in your firm to send/delegate/direct/call upon you for work. Many folks "made partner" in the good times despite lacking that - but those people are gradually being weeded out. The value of that type person, absent specialized skill in a niche area, is dropping rapidly, and is not really worth more than $250K/year even for the most experienced attorneys - since that amount can easily hire qualified attorneys to do that work. Associates need to learn that this is a business now, and the best way to protect yourself is to get out, market, and build a base of contacts who will refer you work - this takes time and is not done overnight, so associates should take advantage of this economy to hustle out to business events and meet people, add them to your contacts base, regualrly connect via lunch, dinner, sports outings etc., regular notes of cases/articles of interest. Also, build yourself an area of expertise - a golden oportunity exist with financial services regualtion - a slew of new laws willbe enacted over the next 18 months, and no one can legitimately claim more expertise than others - so start following this area (or another of your interest), build your expertise, give seminars on the topic, tout yourself as an expert - before long you will be one of the experts.

In reality, the new model seems to be that an attorney without a sustainable book of business is worth 100-250K/year (1st year to 30+years experience, assume personal revenues of 500K per year) depending upon experience (i.e. if you are experienced, it takes fewer supervisor hours to review and polish your work). Above that, your worth is about 30% of your personal chargable revenue above 500K plus 25% to 40% of your base of business. Thus an attorney who has little business but works long hours and brings in revenue of 600k is worth 133k to 280k/year, conversely, an attorney who brings in personal work revenue of 1,000,0000 and has 2M of business base is worth 910K/year.

This is the reality, so instead of just bitching, do the things necessary to build your value. Those with a book of business can easily move firm to firm if not appropriately compensated, those without are at the whims of those who control the business.

145 - all true. but as you note, there is a range of compensation that can be justified, and it says something about a firm when they always pay the lowest part of that range and take advantage of the fact that it's difficult for associates to vote with their feet by leaving.

56- and others.

Really the firm is sinking? I would suggest you brush up on your math skills then and realize that though the firm did get rid of people it was around 5% of support staff. The firm is not in trouble, they are proactive. You don't get to be a major global law firm (yes, Reed is a real firm) by making dumb choices. Does it stink for the associates... sure, but how much were they being paid from the start? Anyone know if Reeds starting salary is higher than other places?

Oh and the merger in London has not hurt the firm. Actually they have just moved the London offices (two buildings) into one new space.... yeah that sounds like a firm crumbling. And that new Reed Smith building in PIttsburgh too... yep any second now they'll fall apart.

You people are all out of your minds.

78,

Nice to see a RS bigwig trolling on here!! Say hi to Gregg j from all the people he and his stooges axed. LOSERS

my thoughts:

1. RS is suffering, but probably not any more than any other big firm. The transactional folks are still very slow, despite huge losses in capacity due to the layoffs, but the litigators seem fairly busy. The good thing is that RS never really had the Wall Street transactional work that no longer exists, and no longer had the huge leverage ratios of the big NYC and London firms.

2. I'm ok with the salary cuts if it means no more layoffs for a while. But who is to say if that is the case? The problem I have is timing. why did they need to make the announcement so early? Why not wait until some competitors do the same first, especially if the cuts are not going to be effective until late July?

3. As far as I know, there are no plans to close any offices.

To #78 -- did the college-educated Business Center staff write your post? Typical of the work product after massive staff layoffs. Typos and bad work product ...

The layoffs are more than 5%. There is no mention of all the people who were let go when the mergers took place. No mention of all lawyers who weren't asked to sign with RS. No mention of the many lawyers and staff that didn't want to sign on with RS and left.

Wow! There really are some stupid, Kool-Aide drinking mother fuckers who post on this board.

Most law firms are highly dependent upon cash flow and are poorly built to withstand prolonged economic downturns -- which is why we’ve seen a cascade of failures amongst some pretty well-regarded firms.

I hear that RS is servicing upwards of 100 million in debt, most of which is attributable to the costs of its rapid, and inorganic, growth. You know, it costs money to swallow other firms – important people have to be bought off.

I'm sure some of it also has to due with your e-committee members spending money like its going out of style. I hear that their personal expense reports are illuminating to say the least.

The bottom line is that if the economy does not pick up or, even worse, if it falters some of those debts might just be called in. At that point partners will either have to significantly up their equity contribution to stabilize the firm or flee like rats from a sinking ship. That scenario has recently played out over and over again with firm after firm. Anyone who gloats about the competence of RS's management team and thinks that they are uniquely insulated from the realities of life at big law firms these days is stupid. The folks steering your ship aren’t clairvoyant and they’ve taken some considerable risk to grow the firm at such a rapid clip. Given the firm’s recent and rapid expansion, you should be more worried.

I’m not saying RS is going to fail, but failing or taking a significant step back is not out of the question. I understand – feigning optimism must help you sleep better at night.

Reed Smith LLC,
Law Firm
Hall Of Shame Member
Where Quality Matters But Legal Ethics Doesn't

Last Updated November 10, 2008

On Friday, February 23, 2006, a lawyer named Darren B. Cohen, of the law firm Reed Smith LLP, sent us a Cease And Desist letter on behalf of Sy Garfinkel, President of Sykel and Fabric Innovations. Seems Sy Garfinkel is a teensy bit upset at being called a pompous twit. Sykel is a member of the Hall Of Shame.
What puzzles us is whether Darren took Sy's word for everything or if he, Darren, actually looked at the web pages in question to ascertain for himself the facts of the case. As we understand it, it is the obligation of an attorney to exercise due diligence in determining the facts of a case before proceeding. If Darren did take Sy's word for things, then we think Darren must have slept through Due Diligence 102. If he did not, and he actually investigated the facts, i.e., the web pages for Sykel, then he should take a time-out and sit in the corner wearing a dunce cap. We have taken Darren's Cease and desist letter and highlighted the passages that are false, misleading, misstated law, or just plain laughable. While he asserts damage to Sykel's business, those damages most likely exist only in Sy's mind as he sticks pins in his Tabberone doll.

The Cease and Desist letter is so over the line it's pathetic. There are so many distortions of fact and false statements of law as well and ridiculous threats, this letter should be taught in first year law as "What Not To Do, Dummy!". Reed Smith claims to be one of the 15 largest law firms in the world. We wonder how they got so big with such stupid attorneys working for them.

In this Cease And Desist letter, Cohen threatens us twice with a law suit. First he says: "We will be perfectly clear, Ms. Dudnikov. Unless you or your company immediately takes down the offensive and defamatory pages concerning Mr. Garfinkel and his company from the "Hall of Shame" portion of your web site, and promises to refrain from such actions in the future, we will bring suit against you and your company without hesitation."
Stop, stop,
you're killing me!

No more,
I can't take it! Next he says: "We assure you that Mr. Garfinkel is gravely serious about this matter, and unless we receive your assurances that the site is down or will be down shortly, a law suit will be filed in the Southern District of New York based on, among other causes of action, defamation, including claims for damages in the hundreds of thousands of dollars. "

Huh? "Damages in the hundreds of thousands of dollars." He sounds like Dr Evil in Austin Powers getting ready to blackmail the world. He has obviously mistaken us for someone with money. But, had he bothered to read the web site, he would have realized threatening Tabberone isn't a good approach. Hey, Dimwit! We sued Disney Enterprises, Major League Baseball, and fought M&M/Mars in the "Southern District of New York", and walked away from these billion-dollar companies smiling with settlements in our favor. What makes you think some self-absorbed president of what we consider a second-rate fabric company is going to scare us?

When confronted by our lawyer (Yes, Virginia, we have a lawyer for this one), Darren Cohen seems to have lost his resolve and his certainty as he was unable to state what on the web site was "false, misleading and defamatory" . Greg Beck, from the Public Citizen Litigation Group in Washington, D.C., sent a letter to Cohen as a follow-up on their earlier telephone conversation. In the letter, Greg reminds Darren that, " as you admitted, those paragraphs merely contain quotations from an email authored by Mr. Garfinkel along with Ms. Dudnikov's responses to those quotations. In fact, the selected quotations accurately reflect Mr. Garfinkel's position in the email from which they are taken, and Ms. Dudnikov's responses to those quotations are no more than expressions of her personal opinion."

Wait a freakin' minute, here! What happened to Darren's assertion of "false, misleading and defamatory" statements? Greg goes on in his letter: "Because everything on Ms. Dudnikov's web page is either factually true or a statement of opinion (which you acknowledge in your letter to be protected by the First Amendment), Mr. Garfinkel has no claim against Ms. Dudnikov based on anything on her web site." Greg ends with a flourish by saying: "If Mr. Garfinkel insists on pursuing this baseless claim against Ms. Dudnikov, she will respond with a motion for sanctions, including attorneys' fees, to be sought against Mr. Garfinkel personally as well as any attorney who lends himself to such an endeavor." We like Greg.

You've got to
be kidding! In this Cease And Desist letter, Cohen pointedly warns us "not to post his letter on the web site.", forgetting with whom he is dealing. "Perhaps you are contemplating taking this letter and posting it on your site. As tempting as that may seem, you should think long and hard before you proceed on that route. We assure you that Mr. Garfinkel is gravely serious about this matter.......", like we really care, Darren.

As we look at the Cease And Desist letter, we wonder what lawyer could possibly place himself in such an awkward position. A few minutes reviewing the allegations by Sy Garfunkel and comparing them to the web pages in question, would have turned any reasonable (read ethical also) attorney away from this foolishness. Darren appears to exemplify the lawyer who will take a client's cash regardless of how offensive the task may be. Does this remind you of another profession?

A web site called Elist.com has a number of postings about different goodies. On February 27, 2006, a Paul Levy posted a thread under Interesting People which was a delightful dig at Reed Smith and Darren Cohen and the dreadful Cease & Desist letter sent to Tabberone.

Just to make sure of the names we are using we looked up twit online. This definition comes courtesy of http://www.infoplease.com/dictionary/twit. The word twit means an insignificant or bothersome person. That's Sy.

--------------------------------------------------------------------------------

UPDATE - November 10, 2008 - Seems Reed Smith just can't get a break. The Bair Foundation, which describes itself as a Christian charitable foundation devoted to foster care for children, sued Reed Smith for over-billing, (among other things) in late 2007. Seems Reed Smith quoted a paltry $50,000 to handle a discrimination case (which Bair claims was badly mishandled) and ended up billing them almost $1 Million big ones instead. That's twenty times the original estimate. All those kiddies that won't get foster care because of Reed Smith! Have you no shame, Reed Smith? Opps, that's right, you don't! You're lawyers. That was a retorical question. Silly us.
Should Big Law Firms Only Represent Big Clients? Disgruntled Reed Smith Client Says Yes from WV Business Litigation, outilines the case
'Smaller' Client Claims Reed Smith's Big-Client Focus Led to Inflated Bills is from Law.Com and gives more detail.
What's Going on at Reed Smith? is from Above The Law and gives a different take.

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