Biglaw

Biglaw Firm Cuts Associate Salaries As It Continues Soldiering On With Merger

Attorneys are seeing a 20 percent pay cut.

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Even though folks are getting increasingly desensitized to the general sense of upheaval and uncertainty thanks to COVID-19, the actual conditions are changing — and pretty rapidly. The ever-growing list of Biglaw firms taking austerity measures to cut costs and maintain cash flow is a good reminder of the scope of how the legal profession is being altered by the novel coronavirus.

Yesterday in a call with managing partner Thomas Cole, associates at Pepper Hamilton learned they’d be taking a whopping 20 percent pay cut, while partners are taking an unspecified reduction in distributions. And these salary reductions are likely to last through the end of the year. As one tipster noted, “It’s rough!”

But while all this is going on, the firm is still planning its merger with Troutman Sanders. The combination was originally scheduled to be completed by April 1, but due to the coronavirus, that was postponed to July 1. But tipsters at the firm tell Above the Law that even this extended timeframe sticks in the craw of many now asked to deal with such a substantial pay cut:

What I cannot understand, and what is baffling just about every Pepper attorney I talk to, is that we are proceeding with the Pepper / Troutman merger to be effective on July 1st! Mergers are being cancelled left and right in this market because they are incredibly expensive, mainly from an integration perspective (integrating technology systems, accounting departments, marketing departments, practice groups, etc., etc.). Many attorneys are confused as to why we are spending many millions of dollars on merger integration costs, when partners, counsels, associates and staff are taking 20% pay cuts! Why not put that integration money towards employees at a time during which we are all so vulnerable, and hold off on the merger until the times improve? All energy should now be on taking care of our clients and employees, and bringing in whatever new business is out there – not wasting millions of precious dollars on an unnecessary expense during the most critical time in our history. I think the vast majority of Peppers feel this way.

A spokesperson for the firm provided the following comment:

As a result of the disruption caused by COVID-19, Pepper Hamilton – like many law firms around the world – is undertaking a number of measures to ensure the financial stability of the Firm as we look toward our combined future with Troutman Sanders.

Because the extent of the pandemic’s impact on our clients and the firm is impossible to predict, the firm has reduced distributions to our partners. We are reducing salaries for all other attorneys, which would amount to an annualized reduction of under 12%.

All staff with salaries at or above $60,000 will have salaries reduced on a graduated scale with annualized cuts for the majority of those employees ranging between 3% and 9%.

As we continue to navigate this unprecedented situation, our priorities remain keeping our attorneys and employees safe and healthy, continuing to serve our clients at the highest level possible, taking proactive steps to keep firm financially strong, avoiding layoffs, doing our part to help fight the COVID-19 pandemic, and continuing to work with our counterparts at Troutman Sanders to bring our two firms together on July 1.

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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