The economic crisis triggered by the coronavirus pandemic has hit hardest at the lowest-paid tiers of the workforce, such as hotel and restaurant workers. But the effects are reaching up into the upper echelons of the legal profession as well.
Perkins Coie, Seattle’s largest law firm and a source of high-powered, high-priced legal help for corporate clients from the U.S. to Asia, is among the Big Law firms now cutting costs — though it hasn’t resorted to the more drastic steps of some others.
Perkins began deferring more than 19% of the payouts for its partners in March, and is cutting salaries for associates and many professional staff, the firm said this week, confirming a report in the online publication Law360.
Nonpartner lawyers as well as professional staff making more than $200,000 at Perkins will get a 15% salary reduction effective in June. There’s a 10% cut for staff members making between $125,000 to $200,000, while those making less than $125,000 annually will be spared. It also has deferred the usual midyear staff salary increases and bonuses until an assessment in December.
The cost-cutting and deferred spending appear to be in anticipation of a downturn in business during the rest of the year, as companies grapple with an economy in transition.
Perkins, which has about 1,100 lawyers and is perched high in downtown Seattle’s 1201 Third Ave. tower, reported 2019 gross revenues of $934.8 million, up 8.4 percent from the prior year. It declined to estimate how this year’s revenues will shape up.
In a statement, firmwide managing partner Bill Malley said, “These measures are designed to help build resilience as we enter a period of uncertainty and change in the global economy.”
He added, “We are confident that these measures are fair to all, with partners bearing the greatest share of the burden. It is especially important to us to retain our talent; our people are the heart of our business.”
Perkins said it has not laid off or furloughed any employees at this point, though industrywide thousands have lost their jobs. It also hasn’t required any cash calls from partners to reinfuse capital into the firm.
According to The American Lawyer’s online site, Seattle-based law firm Davis Wright Tremaine has furloughed about 8% of its staff. It has reduced pay for salaried lawyers and staff, by 15% for contract partners and 6-10% for staff based on salary level, with no reduction below $60,000, reports AmLaw. And it’s planning for partner equity distributions to be at least 25% below budget for 2020.
The firm also is starting a partner-funded “employee fund to provide monetary relief to staff members who suffer financial hardship as a result of the pandemic” to help them with household expenses, AmLaw reports.
Elsewhere, some big firms are taking more severe measures. The American Lawyer’s online site has a running chronicle of the industry toll, which includes layoffs or buyouts for staff as well as cash calls.
“Major law firms are adopting drastic measures to shore up their finances and mitigate the economic impacts of the coronavirus pandemic,” reads the intro to its long list of impacts.
For instance, Cadwalader, Wickersham & Taft — considered New York City’s oldest law firm — will stop paying partners entirely for the time being. Washington D.C.-based Arent Fox reportedly imposed 25% pay cuts for associates and staff and a 60% reduction in equity partner distributions. Another big firm, Allen & Overy, is among those holding a “capital call” — telling partners to contribute cash to strengthen its finances.