L&E/contractual issues with BigLaw associate paycuts? Forum

[objctnyrhnr]

Question for you employment lit folks, with the caveat that I am not looking for legal advice for myself and I am not in this hypothetical situation. Just something I found myself thinking about, and wondering if anybody has good opinions on it or has looked into it.

If somebody signs a contract with biglaw to hit 2k Billable hours in exchange for a certain pay, and then with it to increase on the market pay scale each year they’re employed up to 8th year or whatever, and assume they keep hitting the 2k and no other allegation at any point about subpar performance, then isn’t a pay slash, particularly one that doesn’t come with a correspond drop in required hours, theoretically a breach?

I recognize that these contracts probably have some attempt at a cover-firms-ass in this type of situation clause, but it almost feels like such a clause (if exists and if applicable) should be void as unconscionable because it allows one side to unilaterally change what it provides without a renegotiation of any sort or a drop in what other side provides. Right?

Again, I’m just talking out of intuition here. Interested in others’ opinions. Quite possible I’m way off base.

[2013]

Question for you employment lit folks, with the caveat that I am not looking for legal advice for myself and I am not in this hypothetical situation. Just something I found myself thinking about, and wondering if anybody has good opinions on it or has looked into it.

If somebody signs a contract with biglaw to hit 2k Billable hours in exchange for a certain pay, and then with it to increase on the market pay scale each year they’re employed up to 8th year or whatever, and assume they keep hitting the 2k and no other allegation at any point about subpar performance, then isn’t a pay slash, particularly one that doesn’t come with a correspond drop in required hours, theoretically a breach?

I recognize that these contracts probably have some attempt at a cover-firms-ass in this type of situation clause, but it almost feels like such a clause (if exists and if applicable) should be void as unconscionable because it allows one side to unilaterally change what it provides without a renegotiation of any sort or a drop in what other side provides. Right?

Again, I’m just talking out of intuition here. Interested in others’ opinions. Quite possible I’m way off base.

We don’t really sign a contract, so I don’t think any of this applies.

[LaLiLuLeLo]

Yep, no contract.

[dabigchina]

Question for you employment lit folks, with the caveat that I am not looking for legal advice for myself and I am not in this hypothetical situation. Just something I found myself thinking about, and wondering if anybody has good opinions on it or has looked into it.

If somebody signs a contract with biglaw to hit 2k Billable hours in exchange for a certain pay, and then with it to increase on the market pay scale each year they’re employed up to 8th year or whatever, and assume they keep hitting the 2k and no other allegation at any point about subpar performance, then isn’t a pay slash, particularly one that doesn’t come with a correspond drop in required hours, theoretically a breach?

I recognize that these contracts probably have some attempt at a cover-firms-ass in this type of situation clause, but it almost feels like such a clause (if exists and if applicable) should be void as unconscionable because it allows one side to unilaterally change what it provides without a renegotiation of any sort or a drop in what other side provides. Right?

Again, I’m just talking out of intuition here. Interested in others’ opinions. Quite possible I’m way off base.

Assuming that your offer letter lays it out in such detail, then isn't the "renegotiation" they offer you lower pay. If you don't think that's appropriate, you don't provide services (ie quit).

Plus, most offer letters don't pay out a set time period during which you provide services.

[LaLiLuLeLo]

It does raise an interesting question re: bonus. When I lateraled I negotiated a guaranteed bonus that was pegged to my old firm. So, if Old Firm paid $65k, I’d get $65k even if New Firm did a lower bonus.

If that were this year, I wonder what would happen if Old Firm paid a bonus but New Firm did nobonus. I’d assume I’d still get paid out.

[objctnyrhnr]

Question for you employment lit folks, with the caveat that I am not looking for legal advice for myself and I am not in this hypothetical situation. Just something I found myself thinking about, and wondering if anybody has good opinions on it or has looked into it.

If somebody signs a contract with biglaw to hit 2k Billable hours in exchange for a certain pay, and then with it to increase on the market pay scale each year they’re employed up to 8th year or whatever, and assume they keep hitting the 2k and no other allegation at any point about subpar performance, then isn’t a pay slash, particularly one that doesn’t come with a correspond drop in required hours, theoretically a breach?

I recognize that these contracts probably have some attempt at a cover-firms-ass in this type of situation clause, but it almost feels like such a clause (if exists and if applicable) should be void as unconscionable because it allows one side to unilaterally change what it provides without a renegotiation of any sort or a drop in what other side provides. Right?

Again, I’m just talking out of intuition here. Interested in others’ opinions. Quite possible I’m way off base.

We don’t really sign a contract, so I don’t think any of this applies.

Now I’m trying to remember if I just got a letter with my offer or if I signed it. I feel like i signed it but maybe not. Was some years ago.

But even if it’s just a letter containing a promise that induces you to work For them, that’s still Theoretically a quasi Contract right?

[trebekismyhero]

Question for you employment lit folks, with the caveat that I am not looking for legal advice for myself and I am not in this hypothetical situation. Just something I found myself thinking about, and wondering if anybody has good opinions on it or has looked into it.

If somebody signs a contract with biglaw to hit 2k Billable hours in exchange for a certain pay, and then with it to increase on the market pay scale each year they’re employed up to 8th year or whatever, and assume they keep hitting the 2k and no other allegation at any point about subpar performance, then isn’t a pay slash, particularly one that doesn’t come with a correspond drop in required hours, theoretically a breach?

I recognize that these contracts probably have some attempt at a cover-firms-ass in this type of situation clause, but it almost feels like such a clause (if exists and if applicable) should be void as unconscionable because it allows one side to unilaterally change what it provides without a renegotiation of any sort or a drop in what other side provides. Right?

Again, I’m just talking out of intuition here. Interested in others’ opinions. Quite possible I’m way off base.

We don’t really sign a contract, so I don’t think any of this applies.

Now I’m trying to remember if I just got a letter with my offer or if I signed it. I feel like i signed it but maybe not. Was some years ago.

But even if it’s just a letter containing a promise that induces you to work For them, that’s still Theoretically a quasi Contract right?

Are you talking about as a lateral or incoming first year? I remember after my summer I got an offer letter and I did sign it, but it just laid out salary for my first year and didn't lay out anything beyond that. I would assume that's how most offer letters are structured. Maybe for laterals cause you have a little more power you get guarantees written into bonus for the year and maybe even comp for the next year, but I would be shocked if a law firm (even a Cravath that sets the market) guaranteed a certain salary up through 8th year.

[wisdom]

Question for you employment lit folks, with the caveat that I am not looking for legal advice for myself and I am not in this hypothetical situation. Just something I found myself thinking about, and wondering if anybody has good opinions on it or has looked into it.

If somebody signs a contract with biglaw to hit 2k Billable hours in exchange for a certain pay, and then with it to increase on the market pay scale each year they’re employed up to 8th year or whatever, and assume they keep hitting the 2k and no other allegation at any point about subpar performance, then isn’t a pay slash, particularly one that doesn’t come with a correspond drop in required hours, theoretically a breach?

I recognize that these contracts probably have some attempt at a cover-firms-ass in this type of situation clause, but it almost feels like such a clause (if exists and if applicable) should be void as unconscionable because it allows one side to unilaterally change what it provides without a renegotiation of any sort or a drop in what other side provides. Right?

Again, I’m just talking out of intuition here. Interested in others’ opinions. Quite possible I’m way off base.

We don’t really sign a contract, so I don’t think any of this applies.

Now I’m trying to remember if I just got a letter with my offer or if I signed it. I feel like i signed it but maybe not. Was some years ago.

But even if it’s just a letter containing a promise that induces you to work For them, that’s still Theoretically a quasi Contract right?

I'm sure most firms craft the language carefully enough -- for instance, by phrasing your salary offer as your "starting salary" or something -- to avoid creating a binding obligation on them. Even if the letter says, your starting salary is $190k, you did start at that number. If it went higher or lower later, that's not a violation of the offer. I can't remember any firm letter offering employment that laid out the whole 8-year salary track, much less committed to that.

[objctnyrhnr]

Question for you employment lit folks, with the caveat that I am not looking for legal advice for myself and I am not in this hypothetical situation. Just something I found myself thinking about, and wondering if anybody has good opinions on it or has looked into it.

If somebody signs a contract with biglaw to hit 2k Billable hours in exchange for a certain pay, and then with it to increase on the market pay scale each year they’re employed up to 8th year or whatever, and assume they keep hitting the 2k and no other allegation at any point about subpar performance, then isn’t a pay slash, particularly one that doesn’t come with a correspond drop in required hours, theoretically a breach?

I recognize that these contracts probably have some attempt at a cover-firms-ass in this type of situation clause, but it almost feels like such a clause (if exists and if applicable) should be void as unconscionable because it allows one side to unilaterally change what it provides without a renegotiation of any sort or a drop in what other side provides. Right?

Again, I’m just talking out of intuition here. Interested in others’ opinions. Quite possible I’m way off base.

We don’t really sign a contract, so I don’t think any of this applies.

Now I’m trying to remember if I just got a letter with my offer or if I signed it. I feel like i signed it but maybe not. Was some years ago.

But even if it’s just a letter containing a promise that induces you to work For them, that’s still Theoretically a quasi Contract right?

I'm sure most firms craft the language carefully enough -- for instance, by phrasing your salary offer as your "starting salary" or something -- to avoid creating a binding obligation on them. Even if the letter says, your starting salary is $190k, you did start at that number. If it went higher or lower later, that's not a violation of the offer. I can't remember any firm letter offering employment that laid out the whole 8-year salary track, much less committed to that.

Yeah probably a good point. I was a lateral, but thinking back im wondering if it was actually somewhat vague about number after year 1 (but I do know it said salary increases each year).

Luckily not a boat that I’m in at this moment, but I appreciate the insight.

[nixy]

I feel like there’s definitely a way to lay out in a letter what a “normal” yearly progression is without actually binding the firm to provide that pay each year. Admittedly I’m not a L&E lawyer so I’m talking out my ass, but I always understood biglaw lawyers (actually most lawyers) don’t operate under actual contracts.

[Chrysogonus]

At will employment, folks

[objctnyrhnr]

At will employment, folks

So what you’re saying is that in a general at will employment scenario, employer can say he’ll pay you X and then just decide to pay you .75X and your only remedy is to quit?

[ghostoftraynor]

No a L&E attorney, but that sounds right.

But even if wrong, they definitely didn't promise pay bumps, so not sure this is relevant at all outside of first years.

[QContinuum]

At will employment, folks

So what you’re saying is that in a general at will employment scenario, employer can say he’ll pay you X and then just decide to pay you .75X and your only remedy is to quit?

Not an L&E attorney, not offering legal advice to anyone.

Under general principles of contract law, I think it boils down to what was promised. Generally firms promise you what your starting salary will be. So long as they start you at that salary, even for a single day, they've abided by the letter of their promise. (That said, if they bust you down to 0.75X on day 2, there might - L&E nuances aside - be an argument for breach of implied promise - busting you down to 0.75X on day 2 seems a bit too cute. But the further away you get from day 1, the less ground you have, I think, to argue breach of implied promise to keep paying you at your starting salary.) I've never seen, or heard of, a letter promising you what your pay will be for the next 8 years.

[nixy]

At will employment, folks

So what you’re saying is that in a general at will employment scenario, employer can say he’ll pay you X and then just decide to pay you .75X and your only remedy is to quit?

That is exactly what at-will employment means, and it's the overwhelming form of employment in the U.S. (including biglaw attorneys, offer letter notwithstanding). The employer can't decide to pay you less because you're a member of a protected class, so for instance no deciding you'll pay black employees 75% of what you pay white employees, but basically any other reason is fine.

(The rest of this I'm much shakier about, but if I remember my employment law class correctly, I don't think it's really about contract law, because the default in the US is at-will employment. It's intended to protect the employee as much as the employer in that pre-at-will employment, you couldn't just up and quit a job when you chose, either. Some people do have employment contracts, but such contracts are usually pretty specific, particularly about time - i.e. the contract says you will work for 3 years and make $50k to start with a guaranteed raise of $5k per year and a bonus of $X for every, I don't know, 100 sales of widgets you make in a calendar year. As I understand it, that binds the employee not to leave as much as it binds the employer not to fire them.)

[Rooks]

Not legal advice -- hell, i'm not even an attorney.

Here's my opinion/guess

conceptually, this seems it could only be a wage/hour violation. I'm in a pro-employee state, and biglaw is no doubt generally at-will unless a k expressly says otherwise. If there is a k stating "x person shall receive the current Cravath-set pay corresponding with his/her class year" and no force majeure provision overrides such clause, i'd think there may be a case for lack of performance.

No contract/vague job offer letter is interesting. Did a quick search on Westlaw, but I am not experienced enough to quickly find anything on the subject. I'd guess it'd be treated similarly to other job fields reducing salary -- it's instinctually better for a company to reduce the pay of all than layoff some employees, particularly when these employees are making six figures+. So if there is a wage/hour issue, I am unaware of it.

edit: accidental anon

[nixy]

Don't wage/hour violations only apply to hourly employees, not salaried ones like attorneys?

[Anonymous User]

Am I really the only who saved their offer letter? This is a group of lawyers lol.

Here's relevent excerpt from mine: https://imgur.com/a/QucBEFc

Note language like "to give you a general idea, the starting salary for the Class of 2020 is $190,000 per year" and "competitive within our market and relative to other firms." "We review salaries annually," "may be eligible to participate in the Firm's year-end discretionary bonus program." Etc.

Also a section further down noting that it is at will employment of course.

[kaiser]

I am an L&E lawyer, and while I can't specifically advise on this, I can tell you essentially with certainty that no biglaw firm would ever enter into a contract to that effect with an associate. Theres simply no way they could be stupid or negligent enough to actually bind themselves in that way.

[kaiser]

Don't wage/hour violations only apply to hourly employees, not salaried ones like attorneys?

Salaried employees still have certain wage & hour rights. Being salaried doesn't necessarily mean you are exempt, and being exempt doesn't necessarily mean wage & hour issues can't arise now and then. All depends on the details, which state/city you are located in, etc.

[nixy]

Don't wage/hour violations only apply to hourly employees, not salaried ones like attorneys?

Salaried employees still have certain wage & hour rights. Being salaried doesn't necessarily mean you are exempt, and being exempt doesn't necessarily mean wage & hour issues can't arise now and then. All depends on the details, which state/city you are located in, etc.

Thank you! (Again, obviously not my field.)

[objctnyrhnr]

Still feels like there should be a claim in quasi contract or statute. Let’s put our own biglaw experiences aside for a minute.

If a given white collar worker is job hunting and is actively interviewing at like 5 places, then one place says he’s at will but says they’ll pay him 200k per year in exchange for x y and z (to make it easy let’s quantify them as hours billed), and he ends all of the other processes and takes the job, then hits his hours by month 10. Then by month 11, the place says actually we changed our mind for financial reasons were gonna decrease your salary indefinitely....

You’re really saying his only remedy is to quit? I just have a tough time buying that intuitively. But yeah I mean I could definitely be wrong.

[ghostoftraynor]

Still feels like there should be a claim in quasi contract or statute. Let’s put our own biglaw experiences aside for a minute.

If a given white collar worker is job hunting and is actively interviewing at like 5 places, then one place says he’s at will but says they’ll pay him 200k per year in exchange for x y and z (to make it easy let’s quantify them as hours billed), and he ends all of the other processes and takes the job, then hits his hours by month 10. Then by month 11, the place says actually we changed our mind for financial reasons were gonna decrease your salary indefinitely....

You’re really saying his only remedy is to quit? I just have a tough time buying that intuitively. But yeah I mean I could definitely be wrong.

Yea, and think that is the right outcome. Circumstances change. Sure, if they knew the whole time the salary was a ruse, maybe there could be a fraud claim or something.

[kaiser]

Still feels like there should be a claim in quasi contract or statute. Let’s put our own biglaw experiences aside for a minute.

If a given white collar worker is job hunting and is actively interviewing at like 5 places, then one place says he’s at will but says they’ll pay him 200k per year in exchange for x y and z (to make it easy let’s quantify them as hours billed), and he ends all of the other processes and takes the job, then hits his hours by month 10. Then by month 11, the place says actually we changed our mind for financial reasons were gonna decrease your salary indefinitely....

You’re really saying his only remedy is to quit? I just have a tough time buying that intuitively. But yeah I mean I could definitely be wrong.

Maybe this is one of those areas that seems counterintuitive to most folks (and to most non-American its even more counterintuitive), but your employer can absolutely decrease your salary for financial reasons. The exception would be if you have some kind of contractual guarantee that your salary would not be decreased (such as contract of employment, or in a collective bargaining agreement). So long as your employer isn't doing so for a prohibited reason (ex. on a discriminatory basis, because you engaged in union activity, etc.), the default is that such action is permissible. There is no statute that suggests otherwise, and quasi contract certainly wouldn't fly.

[nixy]

Kaiser beat me to what I would have said. I’m not in L&E, but I took a lot of employment law classes, and one of the things we spent the first part of the semester doing was drilling the concept of at-will employment into everyone’s heads. So I think it is counterintuitive, but that doesn’t mean it doesn’t apply.