Nationwide Salary Cut Watch: King & Spalding Is So Last Season

I thought we were done with salary cuts. It’s almost September! Fashion week is on the horizon, but King & Spalding is coming out with an old style. I mean, it’s been multiple weeks since I used this picture.
Just before 5:00 p.m. yesterday, King & Spalding decided it was ready to cut associate salaries:

As you know, the past year has been a difficult one in all industries. The economic turmoil has led to a reduction in demand for legal services and increased pressure on firms to reduce costs. Although King & Spalding remains strong thanks to the quality of our people and our diverse portfolio of practices, clients, and offices, we are not immune to the broader economic environment. As a result, over the course of the past year, we, like other leading firms, have had to make a number of difficult but important changes to ensure our cost structure remains competitive and we are able to generate the opportunities that keep us all engaged.

Earlier this year, many firms “froze” salaries at 2008 levels or reduced them even lower. After closely monitoring those changes, we have decided to make commensurate adjustments to our salaries. Effective September 1, 2009, the annualized salary for U.S. partner-track associates will be equal to their 2008 salary. Partner-track associates in Atlanta and Charlotte will have an additional market-based reduction equal to $10,000 on an annualized basis. The salary for U.S. counsel, other lawyers, and consultants will be reduced by five percent. These salary changes will only apply going forward and will not be retroactive to the beginning of the year. Our plan is to announce 2010 salaries some time during the first quarter of next year, as some firms already do.

Ugh. Doesn’t K&S know that the cool thing isn’t just to cut salaries? All the popular kids are busy making fun of lockstep compensation. Oh wait, I guess K&S did get that message.
After the jump, another wedgie for lockstep.


In his email to the firm, King & Spalding chairman Robert Hays tried to convince everybody that lockstep was already a thing of the past.

The legal industry continues to move toward more individualized, performance-based compensation. To that end, we will continue to rely on our bonus programs to reward superior performance, and our current bonus thresholds and basic structures will remain the same, with one exception. Beginning this year, as is the case at most firms, the bonus amounts paid for performance in one year will be subject to market review early the next year. This means that distribution of bonuses could occur later than the end of February.
Thank you for all of your hard work on behalf of the firm and our clients.

Okay, if there was one thing lockstep compensation was really good at, wasn’t it making sure associate compensation was subject to “market review”? If you are going to move to more “individualized performance-based compensation,” shouldn’t that review have more to do with the individualized performance of your associates, as opposed to what the market is paying other associates?
It’s a serious question. Will high-performing (whatever that means) K&S associates get a bonus commensurate with high billers at the vast majority of firms that have not abandoned lockstep? Or will they receive bonuses like high performers at the few firms that have abandoned lockstep? Will it be whatever number is lowest?
Lots of firms are trying to find ways to reduce the amount of money they pay to associates. With this message, King & Spalding seems to be saying nothing more than that they will wait to see what everybody else does, and then do the same thing. That hardly sounds like a compensation system that is based on performance.
Earlier: Nationwide Layoff Watch: King & Spalding Is Making Cuts
Prior ATL coverage of salary cuts

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