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Salary Cut Watch: Pillsbury Cuts Salaries Based on Utilization Rates

Tuesday, June 9, 2009 11:20 AM - By Elie Mystal

Salary Cuts.jpgThis news has been percolating around for over a week, but Above the Law is now able to report that Pillsbury Winthrop has in fact cut associate salaries.

We don’t have the official memo, but multiple sources at the firm confirm that salaries have been cut 10% - 20% based on associate utilization rates. A tipster reports:

[T]he pay cut is between 10-20% depending on current hours. The memo gave associates ranges of hours and the paycut percentage if you fell in that range. The problem [is] that no one knows how much of their pro bono (which most associates have been turning to during slow times) will count as billable so many associates are unclear what their paycut will be. The Firm looked at hours from Jan through May to make its cuts.

Other tipster report that if your utilization rates were at 90% or higher — essentially, if you are close to hitting your target hours — you received no pay cut. So, to get hit with the 20% pay cut, you had to be particularly slow.

Of course, some people were particularly slow. More details after the jump.

Pillsbury logo.JPGObviously, it has been an unsettling year for Pillsbury associates and future associates. The firm tried a voluntary departure plan, which resulted in 55 people leaving, back in March. Many tipsters report that a significant number of first years were part of those layoffs, which hardly sounds voluntary.

Future first years haven’t done much better. The firm offered $60,000 to incoming associates in “stay away” money. No word yet on how that plan is going, but we know that the Pillsbury payment is $15,000 less than what Stroock is offering.

We have received anecdotal reports that surviving associates at firms that have had massive layoffs are actually extremely busy these days. But it doesn’t appear that Pillsbury cuts have yet resulted in an uptick in work for the remaining associates.

That puts Pillsbury in the classic squeeze many firms are looking at. It is pretty unfair for management to cut associate salaries when the partners are not generating enough work to keep everybody busy. On the other hand, it is also difficult to justify paying huge salaries to associates that are sitting on their hands and not generating money for the firm.

While Pillsbury’s cuts could be interpreted as another hit to the lockstep system, surely nobody wants to replace lockstep with a lottery.

Unfortunately, right now it appears that Pillsbury associates are in a lottery situation. If you are lucky enough to have work on your plate, you keep your salary. Otherwise, you’re looking at a cut.

Of course, people would generally rather eat a 20% pay cut than a 100% pay cut and a commemorative resume update.

Earlier: Nationwide Layoff Watch: Pillsbury’s Voluntary Departure Numbers
Pillsbury: Let’s Try This Whole ‘Voluntary Departure’ Thing One More Time

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