Executive And Partner Salaries Are On The Chopping Block At This Am Law 200 Firm

From: Eberle, Paul
Sent: Wednesday, April 8, 2020 4:21 PM
To: Attorneys – FIRMWIDE; Paralegals – FIRMWIDE
Subject: Leadership Update

Ten days ago, we provided an update on our transition to work from home (WFH) and a preview of the planning that will guide us through this challenging period. We also promised to communicate regularly, with honesty and transparency.

The good news – since going to WFH:

• We have continued to be productive with the average billable hours per day around budget.
• Our total inventory (A/R and WIP) continues to be strong, growing and in line with our budget.

The cause for concern – for the period beginning in mid-March, when we moved to WFH in response to COVID-19:

• Our collections are significantly behind budget and not in line with prior years.
• More specifically, our collections over this period are 17% below our budget and 10% below the same period in 2019.

We – like all law firms – collect a significant amount of our A/R in the month of December.  This year – however – is different.  We are not only significantly behind where we need to be and have been in the past – but we know that there will be a certain percentage of clients who cannot pay us for the work we have done and billed. Clients such as airlines, hotels, hospitality providers, small-medium sized businesses, restaurants, etc. You need look no further than the daily news to understand how this pandemic is impacting the economy and the ability for some of our clients to pay our bills.

With this view, we are modeling various scenarios and implementing multiple measures to improve our cash flow and reduce our expenses.  Here is what we have done so far:

1. Equity Partners, Managing Directors and C-level executives all took significant compensation adjustments.  We felt strongly that these professionals should lead the way and carry the early burden.  Consequently, the Equity Partners cut their monthly draws by another 15% of base compensation, increasing the Equity Partner Holdback from 20% to 35%. Further, all Managing Directors and C-level executives voluntarily took a 10% cut in salary.  This was done at the same time we made the commitment to pay everyone else full salaries for the first 60 days of WFH.

1. We made a number of additional decisions regarding expense reductions, which include:

1. • No salary increases or bonuses in 2020, across the entire enterprise – staff and attorneys
   • A delay and reduction in the length of the summer program
   • Imposition of a hiring pause
   • Deferred Employer FICA payment to 2021 and 2022, as permitted by the CARES Act
   • Reductions in overtime costs
   • Elimination of the CX Workshop, GAA Retreat, HB-U, HB-Lead, HB-Emerge
   • Freezing all non-critical travel expense
   • Reductions in SBU, PSC and OMP spending
   • Reductions in advertising, innovation programs and other such expenses

We hope these initial decisions will be sufficient to sustain the financial health of the Firm through this pandemic.  Recent reports regarding the slowing of the spread of the virus in New York and in Europe are encouraging, but the next few weeks will likely be a rollercoaster as new hotspots develop throughout our country. We don’t know when the virus will peak, we don’t know when the economy will restart, we don’t know the full impact of the government programs and we don’t know which of our clients will be able to pay our bills.

What can you do?  Keep doing what you are doing despite the uncertainty.  We do know that while we cannot eliminate the uncertainty and the anxiety you feel at this time, you have our commitment to try to reduce those fears through regular, transparent communication.  We want you to know what we know and what we are doing, in as “real time” as possible.  Please know, we greatly appreciate your hard work, patience and resilience during these times.  Together we are confident we will come out of this stronger for the experience.

Thank you.

Gregory R. Smith Chairman

HUSCH BLACKWELL LLP
190 Carondelet Plaza, Suite 600
St. Louis, MO 63105-3433
Direct:  314.480.1720
Mobile:  314.406.8621
Fax:  314.480.1505
[email protected]
huschblackwell.com
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Paul J. Eberle
Chief Executive

HUSCH BLACKWELL LLP
555 E. Wells Street, Suite 1900
Milwaukee, WI 53202
Direct:  414.978.5550

Cell: 414.581.0655
Fax:  414.223.5000
[email protected]
huschblackwell.com
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