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?
The holiday season is upon us, and yet again, you have no idea what to get for the fickle lawyer in your life. We’re here to help. Even if your bonus check hasn’t arrived yet, any one of the gifts we’ve highlighted here could be a worthy substitute until your employer decides to make it rain.
We’ve got an eclectic selection for you to choose from, so settle in by that stack of documents yet to be reviewed and dig in…
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@example.com.
We currently have a very exciting and rare type of in-house opening in China at one of the world’s leading internet and social media companies. Our client is looking for an IP Transactional / TMT / Licensing attorney with 2 to 6 years experience. The new hire will be based in Shenzhen or Shanghai. Mandarin is not required (deal documentation will be in English) but is preferred. A solid reason to be in China and a commitment to that market is required of course. This new hire will likely be US qualified (but could also be qualified in UK or other jurisdictions) and with experience and training at a top law firm’s IP transactional / TMT practice and could be currently at a law firm or in-house. Qualified candidates currently Asia based, Europe based or US based will be considered. The new hire’s supervisors in this technology transactions in-house team are very well regarded US trained IP transactional lawyers, with substantial experience at Silicon Valley firms. The culture and atmosphere in this in-house group and the company in general is entrepreneurial, team oriented, and the work is cutting edge, even for a cutting edge industry. The upside of being in an important strategic in-house position in this fast growing and world leading internet company is of the “sky is the limit” variety. Its a very exciting place to be in China for a rising IP transactional lawyer in our opinion, for many reasons beyond the basic info we can share here in this ad / post. This is a special A+ opportunity.
If your firm is in ‘go’ mode when it comes to recruiting lateral partners with loyal clients, then take this quiz to see how well you measure up. Keep track of your ‘yes’ and ‘no’ responses.
1. Does your firm have a clearly defined strategy of practice groups that are priorities of growth for your office? Nothing gets done by random chance, but with a clear vision for the future. Identify the top practice areas for which you wish to add lateral partners. Seek input from practice group leaders and get specifics on needs, outcomes, and ideal target profiles.
2. In addition to clarifying your firm’s growth strategy, are you still open to the hire of a partner outside of your plan? I’ve made several placements that fit this category. The partner’s practice was not within the strategic growth plan of my client, but once the two parties started talking with each other, we all saw how it could indeed be a seamless fit. Be open to “Opportunistic Hires.” You never know where your next producing partner might come from, so you have to be open to it. I will be the first to admit that there is a quirky element of randomness in recruiting.
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