The sky may not be falling for U.S. law firms, but more than three months after nationwide coronavirus shutdowns brought the American economy to its knees, several firms are continuing to enact austerity measures, with Holland & Hart, Stroock & Stroock & Lavan and Fried, Frank, Harris, Shriver & Jacobson recently joining the list.
A recent survey from Wells Fargo Private Bank found that a strong start to 2020 helped limit the slippage in demand to just a 1.4% drop for the first five months of the year. Nonetheless, the measures taken by these firms seems to validate Wells Fargo senior director of sales Joe Mendola’s conclusion that the impacts of dampened demand will become more immediate in the coming months.
Stroock’s response, from the beginning of June, includes both compensation reductions for all attorneys and many staff as well as optional buyouts for employees. Fried Frank is also offering buyouts for staff. And Holland & Hart also implemented compensation cuts at the start of this month.
The Denver-based firm had seen head count dip in recent years before stabilizing at just over 400 in 2019. And revenues ticked upward by 3.1% in the last year, resulting in what a spokesperson for the firm called “one of its strongest years.” But even factoring in a robust first quarter, the firm elected to take preemptive measures to guard the firm’s finances starting in June.
These include reductions to equity partner distributions that exceed the 15% cuts for all non-equity salaried attorneys. Staffers earning over $100,000 are subject to 7.5% cuts, while those earning over $60,000 are receiving 5% cuts. The firm may dial back these reductions at any point based on its financial performance, a firm spokeswoman said.
Stroock’s mix of pay cuts and voluntary buyouts comes following a similar recent history. After several years of falling head count, the 2019 number was essentially flat at just below 250. And revenue grew by 2.8%.
From the start of June, equity partners saw draws reduced by 20% and all other lawyers took a 15% hit. Associates who hit hours targets will ultimately be “made whole,” however. And employees who wish to retire early or avoid returning to the office when remote work ends will have the option of taking “generous” buyouts.
“We believe that the measures we have introduced are fair, and we have used the preceding three months to take a mindful approach to ways in which we can responsibly navigate the current economic challenges,” a spokesperson for the firm said earlier this month.
Fried Frank had a stellar 2019, standing out amid its elite New York peers with a 13.3% increase in revenues and a 16% increase in profits per equity partner. The firm boasted in April that it wasn’t cutting pay and it was providing a technology stipend so its attorneys could work from home better.
It’s still not engaging in any mandatory measures, and attorneys are untouched, a spokeswoman confirmed. But staffers will be able to avail themselves of buyouts. Those who opt in will receive one week of salary for every year of service at the firm, capped at 24 weeks, plus $1,000 for each year.
That’s a sign that even the healthiest of firms are thinking seriously of methods to reduce costs as the pandemic shows few signs of swiftly abating.
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June 25, 2020 at 06:56AM
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