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COVID-19 has thrown the legal profession into upheaval, but for some firms, the time has come to readjust and reassess the austerity measures that were put into place to prepare for the economic downturn. We’ve already reported on several firms that have announced partial and complete rollbacks on their salary cuts, but we now yet another Biglaw firm is reversing course, and almost everyone at the firm is sure to be thrilled.
Since March, Reed Smith — which raked in $1,246,926,000 in 2019 gross revenue, making it 26th on the Am Law 100 ranking — has announced not one, not two, not three, but FOUR rounds of salary reductions for partners, associates, and staff. First, the firm announced that partner cash distributions would be slowed as a “precaution” to “brac[e] for the short-term and potential long-term economic impacts of COVID-19. A short time later, in mid April, the firm came for associate salaries, announcing 15 percent cuts that would last from May through the end of August. About two weeks later, the firm announced that partner bonuses were being deferred and split into separate payments (and the same would happen for staff discretionary bonuses). Then, on June 1, the firm announced that its salary cuts for associates would not only last through the end of the year, but they’d increase to 20 percent. On top of that, staff earning more than $100,000 would take a 10 percent salary hit while other professionals would see reduced workweeks, reduced salaries, and furloughs.
Earlier this week, Sandy Thomas, Reed Smith’s global managing partner, announced that June’s salary cuts, which were originally supposed to last through the end of 2020, would be reduced for some — but not all — those affected, starting in September and lasting through the end of the year. From the American Lawyer:
According to his statement, a current 20% compensation cut for fixed-share partners will be reduced to 15% on September 1. For counsel, a current 20% compensation reduction will be reduced to 15% on the same day.
For associates, a current 15% compensation cut will remain at that level. (Previously, the firm planned a 20% cut for September 1, Thomas’s statement said.)
For professional staff earning more than $100,000, a current 10% cut will become a 5% cut.
Everyone gets a break — except for associates, whose reward is that they won’t be forced to endure even bigger pay cuts for the rest of the year. See, we said almost everyone would be thrilled. “Reed Smith has kept its focus on what is most important as we manage through this extraordinary pandemic: protecting the safety and well-being of our people and supporting our clients,” Thomas said. Sorry, associates. This doesn’t seem fair, but always remember: it could be much worse.
Let’s hope more firms are able to roll back COVID-19 austerity measures — and soon.
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).
Reed Smith Partially Walks Back Pay Cuts for Lawyers, Staff [American Lawyer]
Earlier: Biglaw Firm Cuts Back Partner Compensation Amid COVID-19 Economic Upheaval
Billion-Dollar Biglaw Firm Cutting Associate Salaries
Reed Smith Partners Taking Another COVID-19 Financial Hit
Biglaw Firm Announces Even Deeper Austerity Cuts
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.