Back in June, Dorsey & Whitney laid off 55 people and announced that it was cutting associate salaries by 10 percent. At the time, our sources reported that the decisions were made in reaction to the firm’s revenue numbers from May:
Management got May’s figures last night, and apparently, the situation was quite dire. The prognostications for the future months also did not hold to budget and they decided something relatively drastic needed to be done.
A tipster reports that Dorsey is cutting salaries again. And this time the cut is even more drastic:
Per an email from Marianne Short, the firm is slashing associate salaries firmwide. Could be up to 25-30% for midlevel / senior associates.
The firm contends that salary cuts will not get up to the levels reported by the tipster. But Dorsey is one of the firms that has decided to abandon lockstep compensation. Could that result in 25 percent reductions to base pay?
Additional details and a statement from the firm, after the jump.
We first reported on Dorsey’s decision to move away from lockstep in September. At the time, the firm spokespeople said:
[A]ny suggestion of a cumulative pay reduction is inaccurate….
During regularly scheduled office visits, our Managing Partner meets with associates to discuss topics of interest to them and answer their questions on firm direction and management. Yesterday, our Managing Partner was one of several speakers to address Minneapolis associates during a regularly scheduled office meeting. Not surprisingly, the topic of associate compensation was discussed. Like many firms, Dorsey is reviewing market data and considering adjustments to our system which would emphasize associate contribution and core competencies. As discussed with the Minneapolis associates, no decision on the associate compensation structure has been made yet.
Today, a firm spokesperson told Above the Law:
* Effective 1/1/2010, our associate compensation system will be adjusted to make merit-based elements a more significant part of compensation. Although these changes are reflective of the evolving legal market, they were not made to reduce the total amount of associate compensation. Associates who work hard and master associate competencies will continue to be compensated (through base salary, productivity bonus and discretionary bonus) at or above current levels.
* One of Dorsey’s core values is investment. We invest heavily in our associates, in their training and in their professional development into excellent lawyers and future partners in the Firm. Dorsey’s new associate compensation structure is consistent with the Firm’s core values.
Sources at Dorsey contend that only 5 percent of associates will see a reduction to overall compensation. But the firm would not comment specifically on base salaries at Dorsey in 2010.
Earlier: Salary Cut Watch: Dorsey & Whitney Cuts Salaries by 10%
Staff Layoff Watch: Dorsey & Whitney Shows 55 Employees the Door
Dorsey & Whitney: Do We Have Another Firm Looking to Abandon Lockstep?