Statement from Sheppard Mullin
Sheppard Mullin is in strong financial health and our productivity has remained solid through the pandemic. Like almost every law firm, we are experiencing slower collections. In response, we have reduced and deferred expenses across the board. We now need to include our attorneys and staff in those efforts. We are in this together and we are making these changes now to assure the continued good condition of the firm.
“The adjustments we are making today are fair and equitable and will help secure our strength through this challenging time,” said Sheppard Mullin Chair Guy Halgren. “We reiterate our intent to not RIF or furlough our associates, special counsel and staff attorneys; not RIF or further furlough our staff; and commit that the partners will shoulder a meaningfully larger percentage compensation reduction than associates, special counsel, staff attorneys and staff.”
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Here are the steps the firm is taking, effective May 4:
· We will furlough 17 staff members in addition to the 33 furloughed two weeks ago. As with our earlier furlough group, there has not been work for these team members to do from home. They have been told to expect to return to work in 60-90 days. During the furlough, Sheppard Mullin will pay for full medical benefits. In addition, because of the lag time between when an employee is furloughed and when unemployment benefits are received, partners and senior management contributed nearly $100,000 in personal funds to create a Bridge Fund to provide full equivalent take-home pay during the wait. These bridge funds are a grant, not a loan, and will not be paid back.
· The salaries of associates, special counsel and staff attorneys will be reduced by 12% through the end of the calendar year. Given that the reduction is for two-thirds of the year, that calculates to an annualized reduction of 8%. The firm will conduct a special look-back at the end of the Measuring Year to recognize busy associates. The 2020 associate bonus program will more take into account non-billable activities and will include more focus on the discretionary component. Promotions in class at the end of 2020 will take into account that not all associates could effectively Work From Home.
· Staff members making between $70,000 and $90,000 will have their salaries reduced by 5%/3.33% annualized (not to be reduced below $70,000) and those making more than $90,000, by 10%/6.67% annualized, through the end of the calendar year. We are not decreasing the salaries of any staff members making less than $70,000.
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· For secretaries and selected staff, we will implement a Workshare program, which allows an employer to reduce hours and compensation when there is not enough work for a group of employees rather than laying off those employees. Employees in our Workshare program will receive a 20% reduction in their hours and their compensation. They will receive unemployment benefits relative to the 20% reduction and will be eligible to receive the additional $600 per week federal supplement that runs through July 2020. As such, all staff on Workshare making up to approximately $170,000 will earn more on Workshare than when working full-time, at least through July 31, 2020.
· The partners have committed they will shoulder more of the compensation decreases than anyone else in the firm. At the end of the year, we will measure the percentage reduction in compensation caused by the pandemic for each group and make sure the partners have contributed a meaningfully greater percentage.
As always, our goal is to treat all of the Sheppard Mullin family fairly and with consideration, while making sure we remain a strong firm.
We want to do this right and do it once. We anticipate no further announcements.
Chair Guy Halgren and Chief Operating Officer Ted Tinson held Town Hall meetings today with all associates, special counsel, staff attorneys and staff to discuss the changes and respond to questions.