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Wouldn’t it be nice if the recession 2.0 were a big April Fools’ joke? Unfortunately, it’s not, and Biglaw is trying to figure out how to deal with the economic consequences of the COVID-19 outbreak that’s left many firms reeling. Some have opted for layoffs and furloughs, while others have chosen to cut salaries (some by 10 percent, some by 20 percent, some by 25 percent, and some partners have slowed or eliminated their distributions). Even benefits have taken a hit in this new normal.
The latest firm to make a move is Allen & Overy, and they’re pulling out all the stops. To make sure the Magic Circle firm remains financially secure, partners are holding a capital call and reducing their profit distributions at the same time. The firm has also frozen pay for associates and support staff, and upcoming bonuses people were expecting to receive this summer will now be split into two payments (one in July and one in October). The firm will also be delaying and canceling some recruitment and other events.
“The COVID-19 global crisis is an unprecedented situation for us and our clients,” a firm representative said in a statement. Law.com International has more:
“The firm is in a very strong financial position but given the unknown nature of the evolving challenges, and their long term impact on our markets, it is sensible to introduce some prudent management measures as part of our ongoing scenario planning.
“A&O retains good diversification across practices and one of the broadest international offerings among the global elite firms, so we are confident in our resilience if economic conditions worsen.”
Allen & Overy has no debt and yet the firm is still trying to avoid prospective catastrophe by going through with all of these financial maneuvers. Just imagine what would have happened if A&O had completed its merger with O’Melveny & Myers.
Best of luck to everyone at Allen & Overy as the firm attempts to pull off the greatest magic trick of all by beating a floundering economy.
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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Allen & Overy Holds Capital Call, Cuts Partner Payouts and Freezes Associate Pay [Law.com International]
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.