Salary Freeze

O’Melveny Freezes Staff Salaries to July 2010

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omelveny logo.JPGAt what point does a salary freeze start to feel like a salary cut? Staff at O’Melveny & Myers are about to find out. O’Melveny just announced a new salary ice-age for its staff. Above the Law obtained this internal memo sent to O’Melveny staffers:

We are committed to taking proactive steps to maintain our financial strength in the face of unprecedented economic times. As part of this effort, we continue to look at how we can prudently and efficiently manage our costs and have therefore decided that there will be no salary increases this year and the performance evaluation cycle will be extended from 12 months to 24 months. Your performance evaluation will now cover the period between July 2008 – July 2010. We will consider salary increases at the end of the new performance review period in July 2010.

O’Melveny has already been through layoffs. In March, 200 people were let go, including 110 staffers. So on the one hand, a salary cut is a lot better than being out on the street.
On the other hand, staffers don’t make much to begin with, and nobody wants a static salary. O’Melveny staff better start rooting for the rest of the American economy to continue its deflationary trend.
O’Melveny confirmed that the freeze only applies to staff.
Will we see more ice-age freezes this summer? Stay tuned.
Check out the full firm statement after the jump.
Earlier: Nationwide Layoff Watch: O’Melveny Fires 90 Lawyers, 110 Staff

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Inside the Black Box: Jones Day Staff Salary Freeze

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Jones Day Logo.jpgAs many of you know, Jones Day guards its salary information as if the firm is protecting the Holy Grail. Compensation is kept confidential and talking about what you make, even to colleagues, is generally discouraged.
But no firm is immune from the global economic crisis. Today, a piece of information leaked out of Jones Day regarding a freeze on staff salaries:

In responding to these kind of challenges, the Firm has always been concerned about the long-term and about what is in the best interests of our clients, our lawyers, our employees, and the Firm as a whole. Thus, we consistently try to make decisions that are aimed at protecting those long-term interests. That process requires that we adjust to meet new challenges, and it means that we must be prudent in managing our costs and expenses to ensure that we maintain our solid financial foundation.
Consequently, as the year has unfolded, we have examined all of our spending and are making adjustments in a number of areas. As a part of that examination, and after careful consideration, we have made the difficult decision that salaries for all legal support personnel and staff in all Offices and Departments of the Firm will remain at their current levels through June 30, 2010, and that no Year End Payments or discretionary bonuses will be paid in 2009. We know that these decisions may be disappointing for you and your families. We also are confident that you share our commitment to the long-term success of the Firm and understand that these decisions are one part of ensuring that success.

As we’ve seen around the legal industry, employees — be they staff or associates — are generally willing to suffer a pay freeze if it means they can hang onto their jobs.
But will the pay freeze help Jones Day staff keep their jobs? Notes about the Jones Day performance review after the jump.

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Nationwide Pay Freeze Watch: Skadden Freezes Counsel Salaries

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Skadden logo.JPGThere is late breaking news from Skadden tonight. Apparently the firm has decided to freeze salaries on its counsels. Here is the memo Skadden counsel received:

TO: Counsel

RE: Compensation

Given the current economic conditions and the level of activity within the firm, we have decided that we will not be increasing salaries for counsel in 2009. As always, payment of discretionary bonuses will be contingent upon levels of activity in the Firm’s practice areas, the economic environment as it affects our Firm and individual performance.

We are grateful for your continued commitment to the Firm.

That timing could have been better. But we understand that counsel pay has historically been decided on May 1st, so the firm needed to make a decision.

Skadden has not frozen salaries on associates, and the firm paid top-of-the-market bonuses to its personnel.

The firm has avoided laying associates off during this recession, but Skadden’s Sidebar Program allowed approximately 125 attorneys to take a year-long deferral from the firm.

Earlier: Associate Bonus Watch: Here Comes Skadden

Skadden’s Sidebar: Phase One Complete

Are Salary Cuts Coming?

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Salary Cuts.jpgYesterday, we reported that Allen Matkins is cutting associate salaries. We don’t think that Allen Matkins will start a deflationary trend back towards $145K. But The Recorder reports that top firms are “salivating” for at least one market leader to make it okay for top firms to cut salaries:

But it’s clear that firms high on the Am Law 100 list are salivating for a salary cut as well. It has been a sure-fire conversation starter for months now. But so far, no chairman or managing partner has gone on the record saying he or she wants to cut salaries, or by how much.

A firm in the top 10 to 15 will likely never do it, said consultant Peter Zeughauser. It’s the firms in the top 30 or 40 that may move the market, and they will do it only if they’ve “exhausted all other options.”

Why the lemming-like behavior? Details after the jump.

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Nationwide Layoff Watch: Allen Matkins Continues the Layoff & Salary Cuts ‘Super Combo’

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Allen Matkins logo.jpgAllen Matkins, a mid-sized California firm, is the latest firm to offer the “hemlock package” of layoffs and salary cuts.

The layoffs at Allen Matkins were relatively small. Only about ten people, six of whom were associates, according to ATL tipsters. But the salary cuts were more substantial. According to one tipster:

First year salary has been reduced from $160K to $145K. A number of other associates (excluding first years) were informed that their salary would be reduced by 15% or 30%. Those associates were told that they were selected to receive “adjusted” compensation based on their hours, although the actual method for determining which associate would be subject to this salary adjustment was not disclosed and remains unclear.

Other tipsters weigh in after the jump.

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Mystery Meeting At Hunton & Williams

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Hunton Williams logo.JPGWe love to point out when our commenters point us in the right direction. Over the weekend, somebody placed this comment in the recent Law Shucks post:

Hunton & Williams is planning big layoff in week ahead. The firm has been laying off PARTNERS in stealth moves during the past two months and a firm-wide meeting is scheduled for this week. Expect big staff cuts since those attorneys are no longer around.

In response, one of our tipsters did some checking:

Saw a comment under the law shucks story that Hunton was having a firm-wide meeting this week. Came in and checked today, [rooms have been reserved] by Human Resources from 11:30 to 1:00…. on Friday.

Hunton & Williams did not respond to our requests for comment. But there are a lot of issues that the firm might choose to address this coming Friday.

We’ll get into our other tipsters’ reports after the jump.

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McGuire Woods Cuts First-Year Associate Salaries

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McGuire Woods logo.jpgAdmit it, you knew this was coming. We’ve got a firm capitulating to the market realities and cutting first-year associate salaries.

McGuire Woods chairman Richard Cullen left a voice mail (!) to his attorneys last night. He let everybody know that the firm was cutting 10% off of first-year salaries, from $160K to $144K.

UPDATE: There is some variation in starting salaries by office. 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.

But that is not the only cut future McGuire Woods juniors can expect. Cullen also told the firm that the 2009 summer program is being scaled back to an eight-week affair.

Salaries for all the other associates at the firm have been frozen at 2008 levels.

But, and this is important, no layoffs at McGuire Woods.

Richard Cullen did not respond to an immediate request for comment.

For weeks, the ATL commenters have been claiming that “no first-year attorney is worth $160,000!!!!!!!!!!” At McGuire Woods, that is now true. And there are a lot of laid off first years who would gladly take a $144,000 a year job.

We’ve seen a lot of contraction in the legal industry. But now we could start to see serious deflation in the industry.

Nationwide Salary Freeze Watch: Buchanan Ingersoll, and a New Round-up

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pay freeze salary freeze pay cut law firm.jpgAfter yesterday’s staff layoff news, it may come as no surprise that Buchanan Ingersoll & Rooney is the latest firm to freeze associate salaries for 2009. From a tipster there:

Buchanan Ingersoll announced a salary freeze for 2009 for all associates except “unusual” cases, e.g., laterals who were brought in at what is now perceived to be slightly undermarket salaries last year may get bumped a little. Several other raises on a case-by-case basis, but they will be few.

Better a freeze than a lay-off, we say. We’ve updated the list of firms that have chosen not to institute class year raises. The list is now 47-firms strong. Check it out, after the jump.

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Nationwide Pay Freeze Watch: Pillsbury Two-Step

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Adrein Brody now wants Penelope Cruz.jpgLast week, Pillsbury was busy throwing mama from the train. But underneath the layoff news, the firm instituted other cost cutting measures. On Tuesday, Pillsbury decided to freeze salaries.

Pillsbury is one of the firms with a two tiered associate payscale. A tipster reports that a number of Pillsbury associates were already receiving below market pay, before last week’s freeze:

[I]n June of 2007, Pillsbury decided to meet the Biglaw salary raises that occurred at the time (albeit they were a later mover on the raise issue). However, they also said in June 2007 that new requirements were tied to the salary increases. Departing with prior firm practice, any associate who did not meet a minimum of 1800 billable hours for 2007 would be advanced in class year, and would be advanced in their billing rate, but would be “held back” in salary step increases.

The 2007 policy was made less onerous because there was an easy way for associates to make that money back in 2008:

If the associate that was “held back” in pay for their 2007 numbers billed 1950 hours or above in 2008, they would (a) be advanced in class and salary to become equal again to their actual class year, and (b) would be given a “true up” bonus for 2008 whereby they would be paid the difference in salary they were supposed to be making during 2008, but did not because they were held back in terms of pay.

Pay plans made in 2007 are about as relevant as Adrien Brody standing on the same stage as Robert DeNiro and Anthony Hopkins. It’s nice for context, but painfully out of place given current standards.

After the jump, we look at what Pillsbury is doing now.

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International Layoff / Salary Freeze Watch: Allen & Overy Hits Us With Their Best Shot
(Layoffs hit almost 10 percent of lawyers and staff.)

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allen overy logo.jpgThis morning Allen & Overy quit beating around the bush and sent a firm-wide email announcing that there’d be some changes around there — major changes. It was with a heavy heart that firm managing partner Wim Dejonghe and senior partner David Morley inflicted a world of pain on its personnel:

Since the beginning of December, the Board has been conducting a thorough review of our business in response to the unprecedented economic conditions in which we are now operating. The inescapable and reluctant conclusion of that review is that there is simply not enough work to keep all of our people busy, and we do not see that changing in the foreseeable future.

In the beginning, Allen & Overy said: let there be layoffs, half in London, the rest from the network:

• Partners – A global reduction in partner headcount of approximately 9% (47 partners) and around a further 7% (35 partners) subject to equity adjustments. Around half of those affected will be London partners. This process is at an advanced stage and will be completed by the end of this financial year on 30 April.

• Other fee earners – A proposed 9% reduction in numbers of other fee earners globally. Around half of these are proposed to be in London, where the redundancy programme we undertake is likely to result in approximately 100 other fee earners leaving the firm. This will be subject to local employment processes which will commence immediately.

• Support Staff – A proposed 9% reduction in support staff headcount. Again, around half of these people would be in London, where roughly 100 staff are likely to be affected. This will also be subject to local employment law and, where appropriate, consultations, which will commence as soon as possible.

And then the firm created a firmament in the salaries and billable hour rates:

• Pay – For 2009 pay will be frozen for all staff globally – fee earning and support staff alike, subject to local employment law, where applicable.

• Fee rates – Acknowledging the impact of the global financial crisis on the firm’s clients, our headline billing rates are to be frozen at 2008 levels until further notice.

A spinoff, the full email, and whether Deirdre Dare is causally related to this mess, after the jump.

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(Layoffs hit almost 10 percent of lawyers and staff.)”

Nationwide Layoff Watch: Layoffs and Salary Cuts at Thompson Hine

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Thompson_Hine_logo.jpgThe song “Cleveland Rocks” always seemed like a bit of a stretch to me, and yesterday’s events did nothing to dissuade. We’ve received several reports that 400-attorney Midwestern firm Thompson Hine has been conducting layoffs in its Ohio offices, including its Cleveland one:

12 lawyers, 5 paralegals, and 29 secretaries.

Another tipster reports that the layoffs number “at least 50.” Apparently three first year associates were among the carnage.

If this post sounds like run-of the mill layoff story about a small firm in a distant kingdom, you’re absolutely right. Except for the part where Thompson Hine takes away its 2007 salary bump and employs the second most terrifying economic deflection tactic we’ve seen yet:

word is that the firm has cut every associates’ salary by $20,000/year.

The firm has not responded to our request for comment, but if true, Thompson’s use of the Salary Cut marks the second appearance of this dastardly weapon since the economy tanked. Recall that last week, WolfBlock chopped associate salaries by 10%.

While the threat of the Salary Cut is contained at this time, let us pray that this spawn of an unholy alliance between the Reverse Perk and the Salary Freeze does not become epidemic.

Update: The firm has confirmed the pay cut and layoffs, to Am Law Daily:

Earlier this week Cleveland’s Thompson Hine told its associates and other non-partner lawyers that it will impose an across-the-board $17,500 base salary reduction. Those lawyers will, however, be able to earn back some or all of that sum as a bonus if they bill at least 1,750 hours this year….

The firm also announced layoffs this week, eliminating the jobs of 12 associates, five paralegals, and 29 secretaries. Furthermore, it has pushed back the starting date for its incoming first-year class to January 2010.

Thompson Hine M.P.: Associate Pay Cut Expected to Save Jobs [Am Law Daily]

Nationwide Pay Freeze Watch: Lexis Parties Like It’s 2008

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Lexis.jpgLexis employees who Shepardize “Lexis salaries” may now find a red stop sign attached to their search results. Last Tuesday, the powers that be at Lexis sent around a company-wide email announcing that 2009 salaries would be frozen at 2008 levels for all employees:

In order to address what is shaping up to be a more challenging 2009, the senior LexisNexis management team, which includes the leaders of all business and functional units, has had to make some difficult decisions. These decisions include freezing salaries at 2008 levels across all of LexisNexis Group…Except for a promotion or when an increase is required by local law, no one in LexisNexis Group will receive an increase in 2009.

Salary freezes these day are as common as HPV, but a tipster reports that Lexis’ freeze is actually surprising given an earlier announcement:

This is after they announced on a company-wide call in December that there would be a 2% pool for raises.

What’s Locke Lord Bisell got to do with it, after the jump.

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