Seyfarth Shaw is set to become the latest firm to flip its incoming associates the Bird. A very angry tipster reports:
[Seyfarth] just deferred all incoming associates to October 2010 with only $2000/month as a stipend beginning on our former start date of January 19, 2010! It’s a joke … we know for a fact that they were busy and could have afforded us. It is a firm managed by horrible, greedy, selfish individuals … This is amusing, in light of the fact that the firm turned a profit last year …
We would like to warn anyone considering accepting an offer from the firm to STAY AWAY!!!!!!!!!!!!!! It is particularly disconcerting for those of us who turned down offers from Biglaw in favor of a firm that apparently “cared soooo much” about us. Go Vault or go home.
Whoa, tell us what you really think. You have to wonder if these deferred incoming associates will come up with any fun banners about their would-be employer.
As angry as the deferred incoming associates appear to be, it is not at all clear that Seyfarth could have afforded to bring on a new class of people at this time. In addition to telling the incoming associates to wait for almost another year, today the firm announced that it was cutting first year associate salaries.
Details and a statement from Seyfarth, after the jump.
So, Baker Botts – Houston (should be firmwide, though I don’t have have all the details) is adopting a form of the Reed Smith pay structure. …
My understanding may be imperfect, but the notion is that it’s something like a three part system of junior associates, mid level associates, and senior associates, with pay discrepancies laid out among the three. No more lockstep. Unclear what the bonus structure is beyond the nebulous “merit” nonsense.
The Reed Smith structure has received a lot of attention. Last month, we mentioned that Reed Smith will categorize associates as junior, mid-level, or senior associates. But those classifications won’t necessarily be tied to how long an associate has been out of law school. So you could see a fourth-year classified as a senior associate making significantly more than a sixth-year classified as a midlevel associate.
Today, the Legal Intelligencer reports that the Reed Smith plan will also include a cut in associate salaries and billing rates:
Reed Smith has cut starting salaries by about 20 percent for the 51 first-year associates set to start in January and, in turn, is cutting their billing rates by the same margin.
You can read the full Reed Smith memo about its salary and billing rate reductions after the jump.
Will the Reed Smith system become the template for associate compensation at other firms? Let’s take a look at what Baker Botts is planning.
Have you noticed that whenever there is a story about the long-term future of associate salaries, there is always a quote from somebody at Altman Weil, the law firm consultancy? And have you noticed that their quotes are often advocating deep cuts in associate pay?
The latest example of this curious phenomenon appears in the Fulton County Daily Report:
Altman Weil’s Oct. 27 program, called “Leverage, Lockstep and the Changing Associate Model,” was for law firm clients.
Altman’s James D. Cotterman, who advises firms on compensation, said associate pay did not drop enough in the recent round of cuts at the nation’s big law firms, which included Atlanta’s largest firms.
Cutting pay from $160,000 to $145,000 was only “about half of what was needed,” said Cotterman. The starting salary at big firms in New York, Washington and Los Angeles was $160,000 before the pay reductions that started last spring.
Cotterman said a $15,000 cut does not make a significant difference in “changing the value equation to clients.”
“They probably should have set pay back a decade, to 1998. That’s what I was expecting,” he said. “This story may not be over yet.”
I don’t see James D. Cotterman advocating that profits per partner go back to 1998 levels. I wonder why?
“We’re running our own business and focusing relentlessly on client relationships,” said Francis M. Milone, Chair of the Firm. “Doing so responsibly means continuing to reduce expenses, committing to the people in whom we are already invested, and looking at compensation across the board to ensure our structure matches the reality the entire legal industry must face.”
The July announcement was the culmination of the effort made by MLB and its chairman, Francis Malone, to reform the Biglaw business model. Back in April, Milone gave an interesting interview to the Philadelphia Inquirer:
Question: Law firms are still very profitable. Why do they need to downsize? Answer: You have to make a judgment about whether you can keep people busy going forward. It is not healthy for a lawyer to not be busy, to have free time on his or her hands. You don’t grow, you don’t develop, you’re not happy.
And from a cultural perspective, you don’t want to build a firm that culturally is populated by a lot of people, or too many people, who don’t have enough to do. Q: Is that the only reason? A: The other piece of it is the feedback we got from clients. Because they’re looking at the way they want law firms to act. They’re not going to be as willing to pay, frankly, to train new lawyers. So it’s going to be harder to find things for new lawyers to do. And when we’re paying new lawyers $160,000 and clients don’t want to pay for them, you’re putting them in a position where there may not be a lot of things for them to do.
Well, 2010 is almost upon us. But MLB is suddenly not so excited about ending lockstep compensation. Milone conducted a firm-wide video conference yesterday, and tipsters report his enthusiasm for ending lockstep compensation was noticeably lacking.
Details and a statement from the firm, after the jump.
Don’t you love it when a firm cares so much about associate development that it’s willing to cut associate salaries? That’s what Foley Hoag is doing; the firm announced today that it was slashing salaries, in part to help associate development and recruitment. Here’s a screen shot of the firm wide memo (click to enlarge):
How does cutting salaries help the firm recruit new associates and maintain current associates?
In any event, check out the rest of the memo and tipster reports on how deep the cuts actually are after the jump.
The Great Recession has been tough for many different types of firms — and that even includes intellectual property firms. During the past year, IP-focused shops have cut back on hiring, slashed salaries, and lost key partners to larger firms.
A few recent developments at Finnegan Henderson, the D.C.-based IP powerhouse, reflect the new realities. Multiple sources report the following:
1. Earlier this week, at an “all associates” meeting, the firm announced that it is freezing associate salaries.
2. At the same meeting, the firm announced that it is reducing first-year associate salaries from $160,000 to $145,000 (in all offices).
UPDATE: We understand that Finnegan has frozen support staff salaries as well.
Two additional items about Finnegan, after the jump.
There have been a number of firms that have cut associate salaries. But there have not been many firms that have needed to slash salaries twice this year. Allen Matkins associates appears to be in their own personal corner of sadness.
A tipster reports:
For the second time this year, Allen Matkins has laid off lawyers and cut salaries for those who still have a job. 2 lawyers were laid off in Los Angeles. I am not sure how many in other offices, but I know there were more. Salary cuts were also part of the package. Associates untouched by the last round of salary cuts were not so lucky this time. Cuts ranged between 15% and 30%. … This cut occurred Thursday October 15. Cuts are effective November 1, 2009. Nice holiday gift isn’t it.
Allen Matkins has not responded to our multiple requests for comment. In terms of layoffs, other tipsters have reported a few involuntary attorney departures. 2nd year associates seem to be the hardest hit.
Multiple tipsters are also reporting the salary cut news.
Following along with all of the Allen Matkins cuts is a little bit confusing; let me walk you through it after the jump.
Williams Mullen, the large and prominent Virginia-based law firm, announced yesterday that it will be cutting associate salaries by 7.5 percent, effective in January 2010. The new starting salary for associates will be $117,000 (in all offices other than D.C.).
A firm spokesperson described this as “a business decision,” made to remain competitive in a rapidly changing market. She added that the Williams Mullen cut was comparable to steps taken by similar firms, including Hunton & Williams and McGuire Woods (which cut starting salaries for associates by 10 percent). [FN1]
“Our clients are saying, ‘You better do this,’” the Williams Mullen spokesperson said. “This is a market adjustment just like any other adjustment, just like any other business adjusting the cost of its product.” If the firm were to keep associate salaries the same in this economic environment, “our clients would look at us and say, ‘You’re no longer competitive.” She added that equity partners would also see a decline in their incomes due to market realities.
As for whether this cut might be revisited at a later date, the spokesperson noted that matching the market goes both ways. “You can adjust down, and you can adjust up,” she said. “When things start to get better, we’ll look at ways to adjust accordingly.”
[FN1] UPDATE: A point of clarification about McGuireWoods: although the firm did cut starting salaries, incoming associates at the firm are still earning more than $117,000. New hires are making $144,000 in Northern Virginia, D.C., Los Angeles, Chicago, and New York, while new hires in Richmond, Charlotte and Atlanta are making $130,500. Earlier: Prior coverage of associate pay cuts
If you live in California, you are surely aware of the state’s budgetary concerns. But if you work for Morrison & Foerster in California, you may now have some budgetary concerns of your very own.
MoFo decided to cut salaries today, but associates in New York and Asia will be spared the hardship. Here’s the official statement from the firm:
Starting salaries at Morrison & Foerster in New York and Asia will be $160,000, the same as last year, and starting salaries in other U.S. offices will be $145,000.
Note, however, that the market for first year salaries among national firms is undetermined at this time. Given that, we will continue to assess starting salaries, in light of market trends, and may elect to adjust as required based on larger market developments.
It’s time for a quick follow-up on yesterday’s “all associates” meeting at Winston & Strawn. Alas, it was a bit anticlimactic. “Just a way for the firm to ruin everyone’s weekend,” quipped a tipster.
According to our sources at the firm, this is what associates were told:
1. Compensation at Winston will remain competitive; no salary cut will be imposed at this time. (The firm froze salaries earlier this year.)
2. Layoffs were necessary, and they have been conducted, but hopefully they’re a thing in the past (although nothing is guaranteed on this score).
So, exactly how many people have been laid off by Winston?
So you spent a considerable amount of time courting, selling and maybe even doing some friendly stalking of that attractive lateral partner candidate with a sizable book. After he or she ignored your emails and didn’t return your calls, a few weeks go by and you read a press release in the legal media announcing the recent move to a competing firm.
Rats. Another one got away from you. You cringe when you consider how much time was spent in meetings that did not bear fruit. Your heart aches when recall how you were led to believe this was a marriage made in heaven.
You have been rejected.
The sting of rejection is painful, even for fancy law firms. But you need to find a way that you can turn this disappointment into a legitimate learning experience.
No, this isn’t a pre-party before we come back next fall for the real thing. This IS the real thing. Quinn Emanuel is pushing the envelope on recruiting. The party is now. This is when you meet the partners and associates face to face. This is when we begin the dance that could land you an offer for your second summer BEFORE school starts in the fall.
First: You come to the party. Second: If you like us, you send your resume after June 1, 2014. Third: If we like each other, you get an offer.
We’re not waiting for fall. We’re not doing the twenty minute thing. This party is the real thing!
We hope you’ll join us, and look forward to meeting you.
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past six years. You can reach them by email: [email protected].
Since late last year, things have been booming in Hong Kong / China in cap markets, especially Hong Kong IPOs. M&A deal flow has recently been getting a bit stronger as well. Although one can’t predict such things with any certainty, all signs are pointing to a banner entire 2014 for the top end US corporate and cap markets practices in Hong Kong / China. This is not really new news, as its been the feeling most in the market have had for a few months now and things continue to look good.
The head of our Asia practice, Evan Jowers, has been in Hong Kong for about 10 days a month (with trips every other month to both Shanghai and Bejing) for the past 7 months (Robert Kinney and Evan Jowers will be in Hong Kong again March 15 to 23), and spending most of his time there meeting with senior US hiring partners at just about all the major US and UK firms there, as well as prospective candidates at all associate levels and partner levels, and when in the US, Evan works Asia hours and is regularly on the phone with such persons, as our the other members of our Asia team. Our Yuliya Vinokurova is in Hong Kong every other month and Robert is there about 5 times a year as well. While we have a solid Asia team of recruiters, Evan Jowers will spend at least some time with all of our candidates for Asia position. We have had long standing relationships, and good friendships in some cases, with hiring partners and other senior US partners in Asia for 8 years now.
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