Salary Cuts

K&L Gates: A Boston Salary Cut Makes for an Interesting Mob Mollification Strategy

Salary Cuts.jpgK&L Gates is cutting salaries, again. This time the cuts seem directed at K&L Gates associates in the firm’s Boston office. But more importantly, these appear to be tactical cuts that will hurt associates currently at the firm, while doing as little damage as possible to K&L’s recruiting brochures.
A tipster reports the headline news:

K&L Gates slashed salaries last week, at least in their Boston office .. all associates who didn’t meet the billable target (1950 hours) last year saw their salaries cut by 10%. The best part? First year associates–who started with the firm in January, 2010 (two months ago) still retain their starting salary of $160,000. Translation? Most, if not all second year associates are now making 10% less than the first years who have been practicing for 2 months. The second year associates were told that they had their “free pass” last year, which is why the salary disparity is justified.
Yeah. Morale in this office sucks right now.

Multiple tipsters sent in reports similar to this one, all of them were pissed. Not just the second years …

KL Gates logo.JPGIf you didn’t hit 1950 hours, then you took a 10% salary cut. That even bothered associates further up the pay scale. An associate who will still make more than a first year had this to say:

I got a letter with my new salary … and it reflected a 10% cut. I was told is was based solely on hours billed and not an indictment of my performance. …
If you remember, the firm made a big deal about “un-freezing” salaries late in the year – seems a bit disingenuous to make a big deal out of that and then cut salaries, especially when it seems many firms are getting back on their feet and restoring salaries (or at least increasing based on class scales).

Here’s a good lesson we’ve learned from hierarchical regimes throughout history: always give the plebeians somebody to be pissed at besides the rulers. Here, K&L Gates associates could be pissed at their firm leaders. Instead K&L Gates is offering up first years: golden dauphins who will keep their salary at $160K. That’s one way to engender some misdirected anger.
And there is a lot of anger from K&L Gates people in Boston. After all, just this past December the firm announced it was unfreezing salaries a single class year.
In fact K&L Gates is cutting salaries just two months after announcing that it made $1 billion in gross revenue in 2009? K&L Gates’s PPP was up in 2009 as well. The firm made money last year during the recession, why is it cutting salaries on its veteran associates now?
And — aside from some kind of strategy inspired by the Leviathan — why is it docking senior people while keeping salaries steady for new associates that just started at the firm? Sorry, let me ask that question in the form that it will come from a K&L Gates client: Is K&L Gates billing second years out at a higher rate than first years, even though management values some of these second years less then people who are still trying to figure out how the copier works? How can the firm justify charging more for second year attorneys when the firm thinks that they should be paid less than people fresh out of school?
I don’t have the answers to those questions, but such is life in the wacky world of K&L Gates. As far as we know, this particular form of salary cut is only happening in Boston. Of course, the firm would not tell us if its moves are localized to Boston. We’ve deduced that information because all the people screaming right now work in Boston.
So who knows, maybe Boston is kind of a test run for the firm. They’ll try it out and see if disgruntled associates will cower in the face of management, or if they’ll form some kind of Committee on Public Safety to deal with the innocent first years. Either way, it should be good fun.
We’ll keep you posted if we hear that the K&L Gates target salary cut is coming to a city near you.
Earlier: K&L Gates Salary Cut Follow Up
All Your Sacrifices Helped in 2009

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