Hogan Lovells: the firm is 'cutting back on non-essential costs and making measured adjustments to compensation' Shutterstock
Hogan Lovells and Mayer Brown have become the latest top 20 US law firms to impose pay cuts in the face of the Covid-19 pandemic.
They are the third and fourth top 20 firms by revenue to reduce associate pay in the US, following in the footsteps of Baker McKenzie and Norton Rose Fulbright.
According to Above the Law’s The Covid Crisis Law Firm Layoff Tracker, 33 of the top 100 US firms have announced associate pay cuts of whom nine are in the top 50.
At Hogan Lovells, the pay cuts are restricted to US-based lawyers, lawyers in the UK and Asia having already had pay reviews and bonuses due in May put on hold.
From 1 June, lawyers earning more than $100,000 will see their salaries cut by 10%, with the proportion rising to 15% for highly paid counsel and specialist lawyers.
The firm also gave further details of the reductions being made to partners’ earnings: the monthly drawings of US equity partners are being reduced by 15-25% while half of the profits for the first quarter which are due to all equity partners in August will be delayed until November.
“The firm's overall position is very solid. We continue to see an uptick of work in the technology and life sciences sectors, our restructuring practice is very active, and we have successfully advised on headline-grabbing M&A deals,” said Hogan Lovells CEO Stephen Immelt.
“However, we are facing an uncertain environment and economic activity globally continues to drag. Complacency is not an option for us. We are therefore continuing with our policy of cutting back all non-essential costs and making measured adjustments to compensation."
A similar set of measures have been introduced by Mayer Brown, where lawyers' pay will be cut by 15% until the end of the year.
Business services staff earning more than $200,000 will also be affected by the 15% salary reduction, with those staff on less having their pay cut by a smaller amount.
Partners have seen a 20% reduction in monthly draws since March while their distributions for the first half of 2020 have been suspended.
The firm is also offering staff a voluntary leave package of up to 12 weeks on 25% of their salary, rising to 35% for those who undertake pro bono work.
The firm said it was in “a very strong financial position, with excellent capitalization and record financial performance in recent years” but nevertheless needed to take “job preservation measures” in the face of the unpredictable nature of the crisis.
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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