Hogan Lovells' London office: UK staff face a pay freeze and delays to bonuses Shutterstock
International heavyweights Hogan Lovells and Ashurst announced their Covid-19 measures today with Hogan Lovells delaying some partner distributions and bonus payments and Ashurst extending pay cuts to associates.
Under a raft of measure unveiled by Ashurst to shore up its finances in the face of the pandemic, most staff are being asked to reduce their hours by 20% for a three-month period from 1 May.
Hogan Lovells, meanwhile, joins the vast majority of top 50 Am Law firms in shielding its US associates from pay cuts and freezes, although pay reviews and discretionary bonuses due to associates in the UK and Asia in May have been delayed and will be ‘reassessed later in the year’. The firm is also furloughing some staff under Government-assisted schemes in Belgium, France, Luxembourg and the UK.
It added that ‘bonuses and profit distributions for non-equity as well as equity partners for the firm’s performance in 2019 which were payable in May and at other points later in the year will now be spread out equally over each month depending on the amount owed to each partner’.
Ashurst has joined Norton Rose Fulbright’s EMEA and Australia arms, Baker McKenzie’s north America business and Bryan Cave Leighton Paisner (BCLP) in implementing programmes to reduce associate working hours and salaries.
Under the Ashurst scheme, associates in the busiest areas may be asked to work full-time while there will be a floor on salary reductions.
Global managing partner Paul Jenkins said: "The 80% work pattern will help manage capacity levels of the business in coming months. It will impact teams at different times depending on the demand from clients.”
He warned that some markets “face a long road to recovery” but noted demand in equity capital markets, infrastructure work, financial services, dispute resolution, restructuring and employment.
He added: “Pleasingly, several sectors in Asia are picking up, particularly in greater China, as the region starts recovering from the economic effects of the virus.”
Other measures include: a 20% reduction in partner distributions for the next six months, the deferral of associate salary reviews for six months to 1 November; and the delaying of 50% of bonus payments due in July to November.
Unveiling Hogan Lovells’ measures, CEO Stephen Immelt said the firm was taking prudent steps to manage liquidity and costs despite a strong first quarter “with performance at the same level as 2019”.
He added: “Historically, we have made certain compensation decisions with an effective date of May 1 as well as starting our summer student programmes. Given the uncertainties, we are putting them on hold until we know more.”
The firm’s summer associate program in the US, due to start in May, will now start later in the year and is being shortened from ten weeks to four weeks for virtual delivery if necessary.
The firm is also making job offers to all of its second-year summer associates following their graduation in 2021 and for first year summer associates to take part in its summer 2021 student program.
In response to most US bar exams having been moved from the summer to the autumn the start date for first-year US associates is being delayed from October 2020 to January 2021 alongside the provision of stipends to help support them through the autumn.
In the UK, the firm said it had cancelled its summer student program and instead has made offers of a training contract to most of the students and a place on the firm’s winter training program to others.
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
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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