Tracking COVID-19's effect on V100 associate pay/layoffs Forum

[Anonymous User]

Hogan Lovells cutting associate pay by 10%. 15% for attorneys above $400k. Equity partner draws reduced 15-25%. The email says they still expect to pay bonuses but can’t confirm that or what the amount will be.

Surprised it took so long for this news to hit the market. A bunch more bad news from big names about to drop this week too

I work at Hogan and it was only announced to us last night, and we were told it would be made public this morning, so not sure what you mean by it taking so long for the news to hit the market.

[Anonymous User]

Mayer Brown cutting associate pay 15%

[cavalier1138]

Hogan Lovells cutting associate pay by 10%. 15% for attorneys above $400k. Equity partner draws reduced 15-25%. The email says they still expect to pay bonuses but can’t confirm that or what the amount will be.

Surprised it took so long for this news to hit the market. A bunch more bad news from big names about to drop this week too

I work at Hogan and it was only announced to us last night, and we were told it would be made public this morning, so not sure what you mean by it taking so long for the news to hit the market.

Yeah, can everyone can it with the Cassandra roleplay?

If you have specific news about a firm making cuts, etc., then go nuts. Use the anon feature. Write a tell-all. But quit posting these vague "Things will certainly happen in firms yet to be named based on my communications with the spirit world."

[QContinuum]

Updated with the HoLove and Mayer Brown news.

[Anonymous User]

Updated with the HoLove and Mayer Brown news.

MB is now publicly reported.

https://abovethelaw.com/2020/05/top-20- ... id-crisis/

[QContinuum]

Updated with the HoLove and Mayer Brown news.

MB is now publicly reported.

https://abovethelaw.com/2020/05/top-20- ... id-crisis/

Thank you, updated.

[Wearthewildthingsr]

I think firms that don't enact paycuts or layoffs (normal or stealth) ought to move up in the V100 rankings. Thoughts?

[Transaction Lawyer]

This is obviously something to worry about if you’re an incoming SA at Goodwin.

They just laid off some experienced attorneys who frankly (all in) aren’t that much more expensive than a first year associate and much more valuable.

There is only so much money to go around and if the numbers aren’t adding up and Goodwin’s management runs out of more popular options — they will either: (i) not hire all of the summer associates; (ii) give cold offers and/or (iii) hire everybody or some of the summary associates knowing that if billable work doesn’t improve that they’ll have to fire a number of the first years early on (if you accept a cold offer - you’ll likely be fired regardless around then too).

Not hiring the summer associates is not a popular decision but anything is possible when (x) partners aren’t getting paid, (y) star associates are taking 20 percent pay cuts and (z) firms are being forced to lay-off a significant amount of their employees.

Exactly what I was worried about. Thank you for your candid response. Guess I'll go see what's up in the vale.

To be clear, I started talking about firms generally in my last paragraph and not just Goodwin — I recognize this wasn’t clear and apologies for the confusion.

This is not just Goodwin’s problem - it applies to summer associates and all other employees at the majority of firms. For example, my firm has clients who also give work to Goodwin (Goodwin gets a deal and then we get a deal). If Goodwin is hurting - other firms are hurting too (we share the same clients).

I’m not posting for purposes of scaring people but hope it helps at least one person pull their head out of the sand. If you go in hungry and humble and produce good work - that’s all you really can do. You’ll quickly learn when you get into big law that nothing is guaranteed (even in the best of times) and you just gotta be prepared to roll with the punches (I saw another post about guaranteed offers on this forum and it makes me think that people are just clueless - you can be fired at any time - nothing is guaranteed).

[wwwcol]

I think firms that don't enact paycuts or layoffs (normal or stealth) ought to move up in the V100 rankings. Thoughts?

If it’s not clear to you already it will become clear soon enough that almost all these firms will end up cutting salaries (layoffs might distinguish the healthy from the unhealthy firms)

Almost all of them have basically the same set of F500 clients, with some industry and practice differences that won’t matter materially to declining collections, and the same overhead from armies of associates/staff and lots of partners with huge draws

Maybe there was some plausible argument that the baker McKenzies or dentons of the word are different than other firms but hogan lovells or Mayer brown or whoever is no different (meaningfully, anyways) than the other v100s

[nixy]

I think firms that don't enact paycuts or layoffs (normal or stealth) ought to move up in the V100 rankings. Thoughts?

Be the change you want to see in the world, when you get the Vault ranking survey to fill out.

[QContinuum]

I think firms that don't enact paycuts or layoffs (normal or stealth) ought to move up in the V100 rankings. Thoughts?

If it’s not clear to you already it will become clear soon enough that almost all these firms will end up cutting salaries (layoffs might distinguish the healthy from the unhealthy firms)

Almost all of them have basically the same set of F500 clients, with some industry and practice differences that won’t matter materially to declining collections, and the same overhead from armies of associates/staff and lots of partners with huge draws

Maybe there was some plausible argument that the baker McKenzies or dentons of the word are different than other firms but hogan lovells or Mayer brown or whoever is no different (meaningfully, anyways) than the other v100s

FFS no, Cravath is not equivalent to Mayer Brown, let alone Dentons.

[cheaptilts]

For what it’s worth, on AmLaw 100’s revenue per lawyer list, Mayer brown checks in at #57. Hogan Lovells is 65—one spot after Nixon Peabody.

I think there’s a bit of difference. Moreover, the highest ranked firm to announce associate salary cuts is Sheppard Mullin at #49. (This doesn’t include Goodwin’s stealth layoffs)

[Ultramar vistas]

For what it’s worth, on AmLaw 100’s revenue per lawyer list, Mayer brown checks in at #57. Hogan Lovells is 65—one spot after Nixon Peabody.

I think there’s a bit of difference. Moreover, the highest ranked firm to announce associate salary cuts is Sheppard Mullin at #49. (This doesn’t include Goodwin’s stealth layoffs)

Agree, Mayer Brown’s strong reputation means its Vault ranking outperforms its financials. Shouldn’t be super surprising given its AmLaw 100 RPL peers are doing similar things.

Still feels pretty crazy to see a V35 do this though.

[Anon115523]

For what it’s worth, on AmLaw 100’s revenue per lawyer list, Mayer brown checks in at #57. Hogan Lovells is 65—one spot after Nixon Peabody.

I think there’s a bit of difference. Moreover, the highest ranked firm to announce associate salary cuts is Sheppard Mullin at #49. (This doesn’t include Goodwin’s stealth layoffs)

Agree, Mayer Brown’s strong reputation means its Vault ranking outperforms its financials. Shouldn’t be super surprising given its AmLaw 100 peers are doing similar things.

Still feels pretty crazy to see a V25 do this though.

Neither MB nor Hogan are V25s.

[cheaptilts]

To be clear: PPP metrics, Vault rankings, and rankings based on gross revenue provide little insight regarding just how profitable (or costly) each associate is to a particular firm.

I would steer clear of looking at anything other than RPL/PPL in evaluating (e.g., speculating) whether your firm will be “next”

[Anon115523]

To be clear: PPP metrics, Vault rankings, and rankings based on gross revenue provide little insight regarding just how profitable (or costly) each associate is to a particular firm.

I would steer clear of looking at anything other than RPL/PPL in evaluating (e.g., speculating) whether your firm will be “next”

I would argue profit margin is the best indicator of a firm's ability (or lack thereof) to weather a financial downturn. There has been a close correlation between firms with thinner profit margins making the first moves to cut salary (see e.g. Orrick). The vast majority of firms that have announced cuts have margins below 40%. The two most recent movers reinforce this hypothesis: MB is at 34% for 2019 and Hogan is at 36%. Throw Pillsbury in there as well (given they also cut this week)--32%.

Based on this, which you can argue is or isn't a good predictive metric, Sidley and Ropes are the most likely first movers for cutting salary among the V20 (both with 38%--the lowest among the V20s)--although I know Sidley has said they don't plan on making any cuts "at this time." W&C (39%), WIlson Sonsoni (35%) and MoFo (32%) are some other higher ranked firms with margins below 40% that I could see making cuts in the near future.

[Wild Card]

Based on this, which you can argue is or isn't a good predictive metric, Sidley and Ropes are the most likely first movers for cutting salary among the V20 (both with 38%--the lowest among the V20s)--although I know Sidley has said they don't plan on making any cuts "at this time." W&C (39%), WIlson Sonsoni (35%) and MoFo (32%) are some other higher ranked firms with margins below 40% that I could see making cuts in the near future.

This is actually a great list of overrated firms.

[Anon115523]

To be clear: PPP metrics, Vault rankings, and rankings based on gross revenue provide little insight regarding just how profitable (or costly) each associate is to a particular firm.

I would steer clear of looking at anything other than RPL/PPL in evaluating (e.g., speculating) whether your firm will be “next”

I would argue profit margin is the best indicator of a firm's ability (or lack thereof) to weather a financial downturn. There has been a close correlation between firms with thinner profit margins making the first moves to cut salary (see e.g. Orrick). The vast majority of firms that have announced cuts have margins below 40%. The two most recent movers reinforce this hypothesis: MB is at 34% for 2019 and Hogan is at 36%. Throw Pillsbury in there as well (given they also cut this week)--32%.

Based on this, which you can argue is or isn't a good predictive metric, Sidley and Ropes are the most likely first movers for cutting salary among the V20 (both with 38%--the lowest among the V20s)--although I know Sidley has said they don't plan on making any cuts "at this time." W&C (39%), WIlson Sonsoni (35%) and MoFo (32%) are some other higher ranked firms with margins below 40% that I could see making cuts in the near future.

I would also just add to this that further support for looking to profit margin for financial health is evidenced by the higher-margin firms doing the best at taking care of their summer classes (full pay+guaranteed offer) (as well as no salary cuts): WLRK (61%); K&E (56%); Cahill (63%); DPW (50%); Fried Frank (51%); SRZ (50%). There are others, but this sample accurately reflects the fact that it's not just firms in the v10 who are better positioned to get through this than others in the v100--seems like the firms with <50% profit margin are doing the best--regardless of their amlaw or vault ranking (although a higher vault/amlaw ranking does correlate with higher profit margin).

[QContinuum]

Updated with the latest Nixon Peabody news - 10% pay cuts for the remaining associates (the 90% who escaped the previously announced layoffs and furloughs).

[Anonymous User]

Hearing Baker Hostetler cut associate salaries today. Will update later if I get more details but I'm sure someone that works there will fill us in shortly.

[Anonymous User]

I know of two V50 firms doing stealths based on where me and my wife work. I would be skeptical that the vast majority of firms aren’t doing stealths. At every firm there are going to be a fair number of people who keep their jobs only because the economy is roaring and firms need bodies, and there are also going to be great associates in groups where work dried up almost overnight. There’s just not the same workflow as there was 3 months ago. I’m sure some firms are weathering this OK, and I know some groups are weathering better than others.

But the vast majority of V100 is going to see a drop in billing and collectibles this year. That’s got to come out somewhere, and equity partners are going going to bear it last, unless the firm pitches them that a short term loss will he made up in 6 months by keeping bodies for when the economy picks up (assuming it does).

Firms have a pretty simple calculus. Revenue comes from billables. Almost all costs are (1) rent and (2) associate salary. If the work isn’t there for associates, and you don’t want unhappy equity partners, guess where you push the scale?

[QContinuum]

Hearing Baker Hostetler cut associate salaries today. Will update later if I get more details but I'm sure someone that works there will fill us in shortly.

Added for now. Agree that if true, this should go public shortly.

[JusticeSquee]

For what it’s worth, on AmLaw 100’s revenue per lawyer list, Mayer brown checks in at #57. Hogan Lovells is 65—one spot after Nixon Peabody.

I think there’s a bit of difference. Moreover, the highest ranked firm to announce associate salary cuts is Sheppard Mullin at #49. (This doesn’t include Goodwin’s stealth layoffs)

Agree, Mayer Brown’s strong reputation means its Vault ranking outperforms its financials. Shouldn’t be super surprising given its AmLaw 100 RPL peers are doing similar things.

Still feels pretty crazy to see a V35 do this though.

This is exactly right. Vault rankings are meaningless when it comes to these salary reductions/layoffs. The only metrics that matter here is RPL/PPL. Hogan pumps up its total revenue through leverage. It has tons of associates all over the place, the firm is not financially stable, and we're seeing the shit hit the fan for them now.

Pouring one out to the homies at those firms impacted today. Remember, you all still make a lot of cash and things will hopefully get better soon.

[Chrstgtr]

To be clear: PPP metrics, Vault rankings, and rankings based on gross revenue provide little insight regarding just how profitable (or costly) each associate is to a particular firm.

I would steer clear of looking at anything other than RPL/PPL in evaluating (e.g., speculating) whether your firm will be “next”

I would argue profit margin is the best indicator of a firm's ability (or lack thereof) to weather a financial downturn. There has been a close correlation between firms with thinner profit margins making the first moves to cut salary (see e.g. Orrick). The vast majority of firms that have announced cuts have margins below 40%. The two most recent movers reinforce this hypothesis: MB is at 34% for 2019 and Hogan is at 36%. Throw Pillsbury in there as well (given they also cut this week)--32%.

Based on this, which you can argue is or isn't a good predictive metric, Sidley and Ropes are the most likely first movers for cutting salary among the V20 (both with 38%--the lowest among the V20s)--although I know Sidley has said they don't plan on making any cuts "at this time." W&C (39%), WIlson Sonsoni (35%) and MoFo (32%) are some other higher ranked firms with margins below 40% that I could see making cuts in the near future.

Where are you seeing a list of all the firms' profit margins?

[LS989]

To be clear: PPP metrics, Vault rankings, and rankings based on gross revenue provide little insight regarding just how profitable (or costly) each associate is to a particular firm.

I would steer clear of looking at anything other than RPL/PPL in evaluating (e.g., speculating) whether your firm will be “next”

I would argue profit margin is the best indicator of a firm's ability (or lack thereof) to weather a financial downturn. There has been a close correlation between firms with thinner profit margins making the first moves to cut salary (see e.g. Orrick). The vast majority of firms that have announced cuts have margins below 40%. The two most recent movers reinforce this hypothesis: MB is at 34% for 2019 and Hogan is at 36%. Throw Pillsbury in there as well (given they also cut this week)--32%.

Based on this, which you can argue is or isn't a good predictive metric, Sidley and Ropes are the most likely first movers for cutting salary among the V20 (both with 38%--the lowest among the V20s)--although I know Sidley has said they don't plan on making any cuts "at this time." W&C (39%), WIlson Sonsoni (35%) and MoFo (32%) are some other higher ranked firms with margins below 40% that I could see making cuts in the near future.

Where are you seeing a list of all the firms' profit margins?

I had a hard time finding it too. If you click/hover on the individual firm it should be listed in the bubble. (I think this was in the PPL list, but I'm not sure)