Cadwalader: measures being taken by the New York-based firm include suspension of partner distributions. Shutterstop
Cadwalader Wickersham & Taft has suspended partner distributions and cut salaries by up to 25% in response to the Covid-19 fallout.
The measures were announced in a town hall meeting yesterday, according to the US news website Above the Law, which revealed details of the steps being taken by the firm to reduce its ‘near-term’ financial obligations.
They include a suspension of partner distributions during the peak of the crisis, a 25% reduction in the salaries of legal staff for the next four months — a measure that extends to administrative staff earning more than $100,000 — with other staff experiencing a 10% reduction.
In the all-staff memo, managing partner Patrick T. Quinn said despite the current uncertainty there was distinction between the current situation and the 2008 financial crisis and the subsequent "regulatory overhang".
"This is a health crisis and business interruption, not a financial crisis due to underlying economic fundamentals," he explained, adding: "Despite how busy some of us are with urgent client needs at this moment, even the most benign reasonable projections make clear that Firm revenues and billable hours are likely to be reduced during this crisis.
"The longer we wait to take action in response to the virus, the more difficult it will be for us to avoid much more drastic measures later on."
The New York-based firm is the latest of a growing roster of leading international law firms whose measures to shore up their finances have become public.
Yesterday, Allen & Overy said it was freezing salaries, deferring some scheduled bonus payments and increasing partner capital levels as part of its “ongoing scenario planning” that also included adjustments to partner profit distributions.
On the same day, Reed Smith revealed it was slowing partner cash distributions while Womble Bond Dickinson's US arm said it had laid off a small group of lawyers and implemented employee furloughs and 10% cuts to the pay of some staff.
Last week, a number of listed law UK firms, including top 50 practices Gateley and DWF, updated investors on the measures they are taking in response to the crisis.
Knights revealed that it is reducing board members’ salaries by 30% and those of all employees earning more than £30,000 annually by 10% from 1 April while DWF said it was negotiating additional credit on top of its £80m revolving credit facility to secure ‘increased headroom for working capital purposes’.
Further reading on the Covid-19 pandemic