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No one is immune from the COVID-19 pandemic, not even law firms that have attempted to be “prudent” with their cost-cutting measures. What do you do as a newly merged megafirm that’s facing down a worldwide health crisis amid maddeningly declining markets? In this case, you first slash partner pay, and then turn to other costs at the firm.
Today’s news comes from Faegre Drinker Biddle & Reath, the firm that was formed after Faegre Baker Daniels finalized its merger with Drinker Biddle & Reath on February 1. If you recall, the prospective Am Law 50 firm with more than 1,300 lawyers was one of the very first to close its doors over coronavirus concerns.
Faegre Drinker’s partners took a “sizable” hit for the team at the start of April when announcing that they’d deferred their distributions by one-third for the second quarter. Now comes news that later that month came firmwide salary reductions, coupled with staff furloughs. Here’s a relevant excerpt from the firm’s statement (available in full on the next page):
In response to the uncertainty caused by COVID-19, Faegre Drinker’s partners led in absorbing the impact of the economic downturn by deferring a portion of distributions beginning on April 1. Following an internal announcement in mid-April, the firm also implemented a temporary, firmwide reduction in pay of 15% for other lawyers effective May 1. Professional consultant and staff pay has been reduced on a variable, compensation-based schedule, with no reductions for staff or consultants earning less than $50,000 graduating up to a 15% reduction for the most senior employees effective May 1. Faegre Drinker has also temporarily furloughed less than 1.5% of firm personnel, many of whom have responsibilities which are primarily office-based. Furloughed employees are maintaining firm benefits during the furlough period and also have access to state and federal benefits programs.
In addition to these furloughs, we’ve also heard about the layoffs of some personnel at Faegre Drinker. This is what the firm had to say about that:
Separately, Faegre Drinker’s leadership team has continued to advance a variety of combination-related integrations and synergies following the firm’s February 1, 2020 merger. Faegre Drinker completed the planned elimination of a small number of redundant staff positions created by the merger, representing 1.5% of total headcount, and continues to unify firm policies and procedures to realize combination-related efficiencies. Employees whose positions were eliminated due to the combination were provided with enhanced severance packages.
On top of all of that, the firm has deferred the start of its summer associate program to no earlier than July 6, 2020, and will likely be postponing the start date for its incoming first-year associates, but is “still considering options.”
Best of luck to those who suddenly find themselves without a steady paycheck in the middle of a pandemic/economic decline.
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.