SEYFARTH SHAW — MEMO FROM PETE MILLER RE: PAY CUTS AND FURLOUGHS
Dear Colleagues,
At the end of a tough week, I have more difficult news to share with you today. Like many other firms have done in recent weeks, we have elected to take steps to protect the firm’s long-term success.
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Rest assured we are very focused on cost reductions that do not impact anyone’s ongoing employment, and we have already enacted a number of such measures. Last month our equity partners voted to reduce their monthly draws by 20% at the beginning of April. We also paused all hiring and travel, cancelled in-person meetings, including the September partnership retreat and the transactional attorney summit, and we reduced promotional budgets and all non-essential expenditures, such as office operational expenses and overtime.
However, after taking a rigorous and pragmatic look at our 2020 budget and modeling multiple scenarios for weathering the anticipated slowdown in the world’s economies and our own business, we have made several additional tough decisions. While the measures below primarily apply to our US employees, we intend to follow a consistent approach across our international operations.
The first step is to furlough 10% of our US employees (staff and a smaller percentage of attorneys) for 90 days. Bringing people back to work as soon as we can is our highest priority, and we will continually reevaluate the situation. I know you may have questions about what these changes might mean for you. Those employees directly affected will be notified today, and the furloughs will begin on April 23 for staff and April 25 for attorneys. The firm will pay the full cost of health care coverage for all furloughed employees currently covered by our plan, and those furloughed can apply for unemployment benefits, which were recently enhanced by federal legislation.
Additionally, we are instituting pay reductions for all lawyers and the majority of staff. In addition to the 20% monthly draw reduction for equity partners, all other US attorneys will have their base salary reduced 10%. For staff, the reduction will be stepped based on salary level. Salaries over $60,000 a year will be reduced as follows: 0% on the first $60,000 of earnings, 5% on earnings over $60,000 and up to $150,000, and 10% on earnings over $150,000. Salaries of $60,000 and less will not be reduced. All reductions will be effective May 1 and will be reevaluated at year end, or sooner depending on the circumstances.
We are also cancelling the Summer Fellows’ program but have committed to extending offers to those individuals to join us as Senior Fellows in the fall of 2021. Additionally, we have pushed the 2020 Fall Fellows’ start date to January 2021.
We know how upsetting this news is for all of you, especially those directly affected. The Executive Committee and I are extremely disappointed these measures are necessary. I want to reiterate that even though we had to take these actions, we are coming from a very strong foundation. Given the pandemic’s impact on our clients, we anticipate a challenging remainder of the year, and we have to prepare for what is still to come.
Please know that our top priority is to bring our people back to work. Our hope and our goal is to return to normal operations as soon as possible. We are doing everything we can to keep the firm headed in the right direction and to protect its future for all of us. We will continue to explore ways we can help each other during this time, and in fact this week established an Employee Assistance Fund to help cover out-of-pocket expenses incurred by our employees and their families during times of crisis, like COVID-19. (More details on the fund to follow.)
We want to thank you all for everything you have done and continue to do to support our clients, each other and our firm. The firm has already been tested by the pandemic in extraordinary ways, including losing one of our own to the virus this week. Now more than ever, I am proud to work with each one of you. I look forward to the day when we can all work side by side again. Please continue to take care of yourselves and each other, and I hope you and your families stay well.
Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.