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Another day, another round of salary cuts among some of America’s wealthiest and most well-known law firms. As opposed to conducting layoffs en masse like happened during the Great Recession, to combat the economic toll of the coronavirus crisis, many law firms have decided to institute pay cuts across all employee levels instead.
Today, we have news from Am Law 200 firm Smith Gambrell, which last year posted a record 17 percent increase in revenue to $133.4 million and a 32.4 percent increase in net income to $49.7 million. Unfortunately, these successes are no match for the COVID-19 storm to come. The firm is cutting pay for all employees by 10 percent and deferring partner draws by 20 percent. The pay cuts took effect on April 1.
Smith Gambrell has reportedly decided against furloughs and layoffs, even though it’s not feasible for some of its employees to do their jobs in a work-from-home setting.
The firm’s ethos is “we are in this together,” [chairman Stephen] Forte explained. “We want the team fully intact when the curtain comes down on the virus.”
“Prudent management in the face of this approaching tsunami-pandemic motivated us to get ahead of the curve, while we are all working hard to flatten it,” Forte said. He added that one of his favorite quotes, which he’s been repeating to Smith Gambrell’s lawyers and staff, is: “Disasters remind us that we depend on each other.”
Smith Gambrell reported record revenue and profit in 2019, and Forte said that for the first quarter, “we are well ahead of last year’s record performance.” That gives the firm a financial buffer as the pandemic’s economic toll continues.
On the bright side, Smith Gambrell has “committed to equitably restore lost compensation due to the adjustment when we see our way clear of the effects of this crisis.” At least employees have true-up bonuses to look forward to when this is over.
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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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.