14 April 2020

Baker McKenzie becomes first top 20 Am Law firm to announce salary cuts in the US

Baker McKenzie's Washington DC office

Baker McKenzie's Washington DC office, staff earning over $100,000 will receive a 15% pay cut

Global giant imposes 15% pay cuts for high earners in US with 10% reductions in Canada in response to Covid-19

Baker McKenzie has become the first top 20 Am Law 100 law firm to announce associate salary cuts in its home territory in response to the Covid-19 pandemic.

US lawyers and business professional earning more than $100,000 will have their salaries cut by 15% from 1 May, the firm said in a media statement, adding that the measures were designed to avoid lay offs and that equity partners were experiencing 'the largest compensation impacts'.

The firm expects the cuts to last until the end of the year and there will be no 1 July pay reviews. Bonus pools will be reduced by a similar amount, but the timing of payments will not be affected.

It is anticipated that top performers will receive additional payments later in the year and the firm is setting up an emergency loan scheme to help those in ‘extreme hardship’.

Colin Murray, North America chief executive, said: “We all will share in some short-term pain, but in the long term, taking these actions now is the most prudent way for us to move through this crisis as a firm, with the smallest impact possible on our people and our clients.” 

There will be a corresponding 10% adjustment for Canadian staff with no reductions in Mexico ‘due to local policies and regulations’. Nobody's salary across both regions will fall below $100,000 as a result of the cuts.

The firm — the world’s third largest by revenue — is only the third top 50 US firm to announce associate salary cuts in the US in response to the pandemic, after Orrick and Bryan Cave Leighton Paisner.

However, with a relatively small presence in the world’s most lucrative legal market — just 10 of the firm’s 72 offices are in the US — the firm is something of an outlier among the top 20 US firms.

The EMEA and Australia arms of fellow top 20 firm Norton Rose Fulbright have revived the flexible hours scheme which legacy UK firm Norton Rose operated during the financial crisis while, according to The Law Society Gazette, some members of DLA Piper’s UK property and workplace team have been furloughed with the team on full pay.

In all, 10 Am Law 100 firms have announced attorney salary cuts, according to Above the Law’s lay off tracker.

Further reading on the Covid-19 pandemic

A question of timing: the different responses of US and UK elite law firms to Covid-19 — Looming decisions over associate pay and bonuses are a factor in the timing of UK law firm Coronavirus measures

Above all, this crisis too will pass — Rob Millard foresees large law firm mergers and accelerated digitisation in the wake of Covid-19

'It is about being proactive and decisive' — Norton Rose Fulbright EMEA managing partner Peter Scott on the thinking behind the firm's flexible working scheme

General counsel braced for six-month shock to their businesses, survey finds — MoFo poll of 110 GCs finds them making unprecedented decisions as HR issues dominate

'Now is the time for law firms to deliver on their stated values' — Consultant Tony Williams advises law firm leaders to avoid knee jerk decisions and go into communication overdrive during the Covid-19 crisis

Unprecedented response to Covid-19 is 'testament to legal profession's resilience — Stewart Salwin is impressed by how quickly the Arizona courts have adapted to the coronavirus crisis

Staff welfare, supply chain and privacy: the coronavirus-related issues keeping GCs awake at night  — Linklaters, Baker McKenzie and Ropes & Gray have published the most sought-after briefings, according to Lexology

'I have realised how powerful technology now is': an Italian lawyer's take on Covid-19 — The lockdown is forcing Italians to embrace digitisation - and that even includes its public officials, writes Gabriella Geatti

Coronavirus risk may be unprecedented, but the fundamental principles of crisis response still apply — Crisis PR specialist Bethaney Durkin advises law firms impacted by the coronavirus to act quickly while avoiding a kneejerk response

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