Another day, another firm that’s decided the time has come to do away with its austerity measures. In case you don’t remember, this spring, a slew of Biglaw firms introduced various cuts to combat the coronavirus crisis to make sure they’d be able to stay the course during the financial upheaval that was caused by COVID-19 across the globe.
Orrick — a firm that brought in $1,158,537,000 in 2019 gross revenue, placing in at No. 31 in the most recent Am Law 100 rankings — instituted a series of initiatives back in April that were meant to save cash on hand to prudently manage the firm and avoid any job loss. Specifically, the firm reduced salaries for all employees on a graduated scale. On the attorney side of things, career associates took a 5 percent cut, associates took a 10 percent cut, managing/senior associates and most of counsel took a 15 percent cut, and partners, of counsel, and executive staff took the deepest cuts of all. On the staff side, the most junior employees saw salary cuts of just 1 percent, while more senior staff members saw up to a 15 percent salary cuts. On top of those cuts, staff members whose roles depended on in-office activity were asked to work on reduced schedules while secretaries were asked to work four-day schedules. Last but not least, the firm postponed the start date of its 2020 associate class to January 2021.
Today, Orrick will be rolling back all of those salary cuts. This is what will be happening at the firm going forward in 2020, as of October 1:
All associate, of counsel, and staff salaries impacted by COVID salary reductions will be restored to 100 percent prospectively;
All staff moved to a reduced FTE (i.e., roles impacted by office closures) will be moved back to full-time;
Equivalent adjustments will happen in Europe and Asia, including conducting postponed 2020 staff reviews; and
Last but not least, the firm’s associate bonus program will at least match the 2019 scale.
Here’s a statement from Mitch Zuklie, Orrick’s chairman and chief executive officer:
Our entire team has worked very hard to support our clients throughout 2020 and deliver extraordinary results for them. We put a variety of cost management measures in place in March, at a time of uncertainty regarding how 2020 would unfold, in order to give us flexibility. It’s time to reverse some of that, express our gratitude to our associates and staff and recognize their relentless hard work.
Sources we’ve heard from have expressed disappointment that the firm will not be handing out special fall bonuses, with some going so far as to say that morale at the firm is “cratering.” This is unfortunate, but others have told us that Orrick will at least “consider” the fact that other firms have made fall bonus payments to their associates when setting its year-end bonus scale.
As noted previously, Orrick is offering special “make whole” awards to top contributors, no matter their role, and this money will be separate from the firm’s annual bonuses. We know that a little more than half of the firm’s associates have been made whole so far, and the firm expects even more to be made whole by the end of the year. We’ve been told that staff make wholes will be determined at year end.
If your firm or organization is slashing salaries or restoring previous cuts, closing its doors, or reducing the ranks of its lawyers or staff, whether through open layoffs, stealth layoffs, or voluntary buyouts, please don’t hesitate to let us know. Our vast network of tipsters is part of what makes Above the Law thrive. You can email us or text us (646-820-8477).
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Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.