Biglaw

Billion-Dollar Biglaw Firm Cutting Associate Salaries

Even top law firms are cutting salaries.

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The Biglaw cost-cutting measures brought on by COVID-19 is creeping up and up the Am Law rankings, proving big gross revenue is not enough to stem cash flow concerns. The latest firm to announce cuts is Reed Smith, who raked in $1,174,973,000 in 2018 gross revenue, making it 27th on the Am Law 100 ranking.

Today, firm global managing partner Sandy Thomas announced on an all-associate call that associate pay will be cut by 15 percent for May through the end of August. They’re also cutting counsel salary by 10 percent. And they’d previously announced a voluntary leave program during the coronavirus crisis. (The firm also released an FAQ about the cuts, available on the next page.)

A firm spokesperson had this to say about the cuts:

As a result of the effects of the ongoing COVID-19 crisis, we have made a series of compensation adjustments in recent weeks that affect our lawyers and professional staff. After our initial decision last month to defer partner distributions across the firm, we also reduced base pay for counsel by 10 percent for the next three months and deferred decisions on merit increases and discretionary bonus payments for professional staff. We can now confirm that we are reducing associate pay by 15 percent for four months, beginning in May. Annual raises have already been awarded to associates, and their previously announced bonuses will be paid later this month.

According to tipsters, the cuts (particularly since they have associates taking a deeper cut than counsel) have gone over like a lead balloon:

Associates are MAD. Sandy Thomas came on and gave what came off as a very condescending pep talk – we know you’re working hard because we see your utilization and we know your clients need you. Many of us are left to wonder, ok, then why cut our pay so much (5% higher pay cut than counsel took).

Best of luck to those at Reed Smith as they deal with these austerity measures.

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If your firm or organization is slashing salaries, closing its doors, or reducing the ranks of its lawyers or staff, whether through open layoffs, stealth layoffs, or voluntary buyouts, please don’t hesitate to let us know. Our vast network of tipsters is part of what makes Above the Law thrive. You can email us or text us (646-820-8477).

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headshotKathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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