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

[objctnyrhnr]

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)

Would be awesome to see some sort of analysis of profit margins versus decisions not to cut. Specifically, I am wondering: what is the highest US profit margin that has resulted in either associate layoffs or salary cuts to date, and what is the lowest profit margin that hasn’t had either to date?

[filibuster]

This is not a fulsome analysis, but the below data points should give you an idea:

Firms w/ Highest Profit Margins taking Austerity Measures:
--Goodwin 45%
--Boies Schiller 43%
--Baker Botts 42%
--Akerman 40%

Firms w/ Lowest Profit Margins yet to take Austerity Measures:
--Foley & Lardner 24%
--Perkins & Coie 27%
--Hunton Andrews Kurth 29%
--Steptoe 31%

Edit: If you do not count Goodwin's reported stealth layoffs or what is going on at BSF, the only firms with 40+ profit margins to take austerity measures to date are Baker Botts and Akerman.

[objctnyrhnr]

This is not a fulsome analysis, but the below data points should give you an idea:

Firms w/ Highest Profit Margins taking Austerity Measures:
--Goodwin 45%
--Boies Schiller 43%
--Baker Botts 42%
--Akerman 40%

Firms w/ Lowest Profit Margins yet to take Austerity Measures:
--Foley & Lardner 24%
--Perkins & Coie 27%
--Hunton Andrews Kurth 29%
--Steptoe 31%

Edit: If you do not count Goodwin's reported stealth layoffs or what is going on at BSF, the only firms with 40+ profit margins to take austerity measures to date are Baker Botts and Akerman.

Much appreciated. So it’s almost like the correlation really isn’t THAT strong...or at least not nearly strong enough to be particularly predictive? Or are you more suggesting that there are a few outliers, but it otherwise does pretty much track?

Also fwiw I heard from an independent source who works there about the bloodbath at a major Goodwin office. I definitely think whatever’s going on there “counts” in this context.

[TatteredDignity]

Where are y’all pulling profit margins from?

[Anon115523]

Where are y’all pulling profit margins from?

2019 AmLaw PPP rankings show profit margin when you hover over a firm in the chart. Have access through my firm--kind of a pain in the ass to copy the chart since, like I said, you gotta hover over each one.

There's a full table on Wikipedia, but from 2018--though it looks pretty similar to the 2019 numbers.

https://en.wikipedia.org/wiki/List_of_l ... er_partner

[Anon115523]

This is not a fulsome analysis, but the below data points should give you an idea:

Firms w/ Highest Profit Margins taking Austerity Measures:
--Goodwin 45%
--Boies Schiller 43%
--Baker Botts 42%
--Akerman 40%

Firms w/ Lowest Profit Margins yet to take Austerity Measures:
--Foley & Lardner 24%
--Perkins & Coie 27%
--Hunton Andrews Kurth 29%
--Steptoe 31%

Edit: If you do not count Goodwin's reported stealth layoffs or what is going on at BSF, the only firms with 40+ profit margins to take austerity measures to date are Baker Botts and Akerman.

Much appreciated. So it’s almost like the correlation really isn’t THAT strong...or at least not nearly strong enough to be particularly predictive? Or are you more suggesting that there are a few outliers, but it otherwise does pretty much track?

Also fwiw I heard from an independent source who works there about the bloodbath at a major Goodwin office. I definitely think whatever’s going on there “counts” in this context.

Profit margins for firms that have announced cuts/layoffs (according to this thread...but I'm not including BSF--I really don't think they count). As previously noted, the only firms with <40% margins that have announced cuts are BB and GP:

Hogan Lovells (V27) - (36%)
Baker McKenzie (V32) - (34%)
Orrick (V34) - (23%)
Mayer Brown (V35) - (34%)
Goodwin Procter (V37) - (45%)
K&L Gates (V40) - (28%)
Shearman (V44) - (34%)
Baker Botts (V45) - (42%)
Linklaters (V46) - Not ranked in Amlaw 100 (no info)
Cadwalader (V52) - (30%)
Dentons (V55) - Not ranked in Amlaw 100 (no info)
McDermott Will & Emery (V57) - (35%)
Reed Smith (V61) - (30%)
Pillsbury (V62) - (32%)
BakerHostetler (V65) - (22%)
Norton Rose (V66) - (31%)
Nixon Peabody (V68) - (35%)
Crowell & Moring (V69) - (25%)
Venable (V70) - (30%)
Squire Patton Boggs (V72) - (18%)
Sheppard Mullin (V74) - (34%)
Arent Fox (V77) - Not ranked in Amlaw 100 (no info)
Katten (V81) - (36%)
Bryan Cave (V82) - (26%)
Seyfarth Shaw (V83) - (34%)
Fox Rothschild (V85) - (29%)
Duane Morris (V87) - (27%)
Davis Wright Tremaine (V90) - (33%)
Blank Rome (V92) - (29%)
Kilpatrick (V93) - (28%)
Ballard Spahr (V94) - (36%)
Mintz Levin (V96) - (25%)
Foley Hoag (V98) - Not ranked in Amlaw 100 (no info)
Littler (V99) - (34%)

[2013]

This is not a fulsome analysis, but the below data points should give you an idea:

Firms w/ Highest Profit Margins taking Austerity Measures:
--Goodwin 45%
--Boies Schiller 43%
--Baker Botts 42%
--Akerman 40%

Firms w/ Lowest Profit Margins yet to take Austerity Measures:
--Foley & Lardner 24%
--Perkins & Coie 27%
--Hunton Andrews Kurth 29%
--Steptoe 31%

Edit: If you do not count Goodwin's reported stealth layoffs or what is going on at BSF, the only firms with 40+ profit margins to take austerity measures to date are Baker Botts and Akerman.

Much appreciated. So it’s almost like the correlation really isn’t THAT strong...or at least not nearly strong enough to be particularly predictive? Or are you more suggesting that there are a few outliers, but it otherwise does pretty much track?

Also fwiw I heard from an independent source who works there about the bloodbath at a major Goodwin office. I definitely think whatever’s going on there “counts” in this context.

Profit margins for firms that have announced cuts/layoffs (according to this thread...but I'm not including BSF--I really don't think they count). As previously noted, the only firms with <40% margins that have announced cuts are BB and GP:

Hogan Lovells (V27) - (36%)
Baker McKenzie (V32) - (34%)
Orrick (V34) - (23%)
Mayer Brown (V35) - (34%)
Goodwin Procter (V37) - (45%)
K&L Gates (V40) - (28%)
Shearman (V44) - (34%)
Baker Botts (V45) - (42%)
Linklaters (V46) - Not ranked in Amlaw 100 (no info)
Cadwalader (V52) - (30%)
Dentons (V55) - Not ranked in Amlaw 100 (no info)
McDermott Will & Emery (V57) - (35%)
Reed Smith (V61) - (30%)
Pillsbury (V62) - (32%)
BakerHostetler (V65) - (22%)
Norton Rose (V66) - (31%)
Nixon Peabody (V68) - (35%)
Crowell & Moring (V69) - (25%)
Venable (V70) - (30%)
Squire Patton Boggs (V72) - (18%)
Sheppard Mullin (V74) - (34%)
Arent Fox (V77) - Not ranked in Amlaw 100 (no info)
Katten (V81) - (36%)
Bryan Cave (V82) - (26%)
Seyfarth Shaw (V83) - (34%)
Fox Rothschild (V85) - (29%)
Duane Morris (V87) - (27%)
Davis Wright Tremaine (V90) - (33%)
Blank Rome (V92) - (29%)
Kilpatrick (V93) - (28%)
Ballard Spahr (V94) - (36%)
Mintz Levin (V96) - (25%)
Foley Hoag (V98) - Not ranked in Amlaw 100 (no info)
Littler (V99) - (34%)

When are these margin rates from? Is there a chance Goodwin is under 40% now? It went on a hiring spree the past few years.

[lawhawk1836]

Someone ought to update the Wikipedia PPP article with the new AmLaw data: https://en.wikipedia.org/wiki/List_of_l ... er_partner

[Anon115523]

This is not a fulsome analysis, but the below data points should give you an idea:

Firms w/ Highest Profit Margins taking Austerity Measures:
--Goodwin 45%
--Boies Schiller 43%
--Baker Botts 42%
--Akerman 40%

Firms w/ Lowest Profit Margins yet to take Austerity Measures:
--Foley & Lardner 24%
--Perkins & Coie 27%
--Hunton Andrews Kurth 29%
--Steptoe 31%

Edit: If you do not count Goodwin's reported stealth layoffs or what is going on at BSF, the only firms with 40+ profit margins to take austerity measures to date are Baker Botts and Akerman.

Much appreciated. So it’s almost like the correlation really isn’t THAT strong...or at least not nearly strong enough to be particularly predictive? Or are you more suggesting that there are a few outliers, but it otherwise does pretty much track?

Also fwiw I heard from an independent source who works there about the bloodbath at a major Goodwin office. I definitely think whatever’s going on there “counts” in this context.

Profit margins for firms that have announced cuts/layoffs (according to this thread...but I'm not including BSF--I really don't think they count). As previously noted, the only firms with <40% margins that have announced cuts are BB and GP:

Hogan Lovells (V27) - (36%)
Baker McKenzie (V32) - (34%)
Orrick (V34) - (23%)
Mayer Brown (V35) - (34%)
Goodwin Procter (V37) - (45%)
K&L Gates (V40) - (28%)
Shearman (V44) - (34%)
Baker Botts (V45) - (42%)
Linklaters (V46) - Not ranked in Amlaw 100 (no info)
Cadwalader (V52) - (30%)
Dentons (V55) - Not ranked in Amlaw 100 (no info)
McDermott Will & Emery (V57) - (35%)
Reed Smith (V61) - (30%)
Pillsbury (V62) - (32%)
BakerHostetler (V65) - (22%)
Norton Rose (V66) - (31%)
Nixon Peabody (V68) - (35%)
Crowell & Moring (V69) - (25%)
Venable (V70) - (30%)
Squire Patton Boggs (V72) - (18%)
Sheppard Mullin (V74) - (34%)
Arent Fox (V77) - Not ranked in Amlaw 100 (no info)
Katten (V81) - (36%)
Bryan Cave (V82) - (26%)
Seyfarth Shaw (V83) - (34%)
Fox Rothschild (V85) - (29%)
Duane Morris (V87) - (27%)
Davis Wright Tremaine (V90) - (33%)
Blank Rome (V92) - (29%)
Kilpatrick (V93) - (28%)
Ballard Spahr (V94) - (36%)
Mintz Levin (V96) - (25%)
Foley Hoag (V98) - Not ranked in Amlaw 100 (no info)
Littler (V99) - (34%)

When are these margin rates from? Is there a chance Goodwin is under 40% now? It went on a hiring spree the past few years.

These are all from 2019.

[wisdom]

The profit margins do seem to be somewhat predictive because firms with profit margins under 35 have been the clear majority of the cost-cutters. Now we're starting to see some of the firms around that 35% range cutting.

I would put Boies in a special bucket because their layoffs were related to the departure of a lot of partners (so it makes sense that associates serving those partners would leave as well). There really are only a few firms with profit margins 40%+ that have cut so far. Not saying they won't do so, just that they can stay afloat for longer and see whether we have a sufficiently quick and robust recovery to avoid cuts. If we're in a major recession in winter 2020, a lot of firms are going to cut. Maybe everyone short of the crazy profit margins of K&E, Wachtell, S&C, Quinn, or peers.

[wisdom]

Also, Locke Lord is the first firm news to break today.

Vault No. 79

10% salary cut:

https://abovethelaw.com/2020/05/more-as ... -100-firm/

[objctnyrhnr]

What do we think the bad outliers (cutting costs with high profit) are doing wrong or, additionally or alternatively, the good outliers (no cut firms, or at least that have yet to cut, with profit margins comparable to those that have already cut) are doing right?

To the firms in the first category: is it about partner selfishness? Poor recession planning by going on a spree in the past couple years? Insufficiently good layoffs deals which results in associates outing the firm?

To the firms in the second category, is this about partner sacrifice? Conservative hiring during boom in anticipation of recession? Extremely stealthy stealths? An amazing first quarter?

[filibuster]

Also, Locke Lord is the first firm news to break today.

Vault No. 79

10% salary cut:

https://abovethelaw.com/2020/05/more-as ... -100-firm/

According to 2020 Am Law 100, Locke Lord had a profit margin of 35%

[Anonymous User]

What do we think the bad outliers (cutting costs with high profit) are doing wrong or, additionally or alternatively, the good outliers (no cut firms, or at least that have yet to cut, with profit margins comparable to those that have already cut) are doing right?

To the firms in the first category: is it about partner selfishness? Poor recession planning by going on a spree in the past couple years? Insufficiently good layoffs deals which results in associates outing the firm?

To the firms in the second category, is this about partner sacrifice? Conservative hiring during boom in anticipation of recession? Extremely stealthy stealths? An amazing first quarter?

the assumption should be that associates are being stealthed at firms that haven't announced paycuts (not that they shouldn't also be at those who have), period. i know 2 people who have been laid off in the last month from two firms that you would characterize as "good outliers" -- many firms are just choosing to quietly cut costs by laying off associates so they can publicly announce during OCI that they haven't cut salaries. up to you whether that's "good" or "bad" relative to public paycuts for all. and at least at some firms, affected associates are being asked to sign nondisparagements which certainly isn't helping the flow of information.

[objctnyrhnr]

What do we think the bad outliers (cutting costs with high profit) are doing wrong or, additionally or alternatively, the good outliers (no cut firms, or at least that have yet to cut, with profit margins comparable to those that have already cut) are doing right?

To the firms in the first category: is it about partner selfishness? Poor recession planning by going on a spree in the past couple years? Insufficiently good layoffs deals which results in associates outing the firm?

To the firms in the second category, is this about partner sacrifice? Conservative hiring during boom in anticipation of recession? Extremely stealthy stealths? An amazing first quarter?

the assumption should be that associates are being stealthed at firms that haven't announced paycuts (not that they shouldn't also be at those who have), period. i know 2 people who have been laid off in the last month from two firms that you would characterize as "good outliers" -- many firms are just choosing to quietly cut costs by laying off associates so they can publicly announce during OCI that they haven't cut salaries. up to you whether that's "good" or "bad" relative to public paycuts for all. and at least at some firms, affected associates are being asked to sign nondisparagements which certainly isn't helping the flow of information.

Not sure why anon was necessary, but that’s a seemingly valid answer. So super stealth (And likely favorably termed) layoffs combined with non disparagement/disclosure agreements.

Any idea how your friends’ performance was...or how it was viewed by the partners etc before all of this hit?

[Wearthewildthingsr]

What do we think the bad outliers (cutting costs with high profit) are doing wrong or, additionally or alternatively, the good outliers (no cut firms, or at least that have yet to cut, with profit margins comparable to those that have already cut) are doing right?

To the firms in the first category: is it about partner selfishness? Poor recession planning by going on a spree in the past couple years? Insufficiently good layoffs deals which results in associates outing the firm?

To the firms in the second category, is this about partner sacrifice? Conservative hiring during boom in anticipation of recession? Extremely stealthy stealths? An amazing first quarter?

the assumption should be that associates are being stealthed at firms that haven't announced paycuts (not that they shouldn't also be at those who have), period. i know 2 people who have been laid off in the last month from two firms that you would characterize as "good outliers" -- many firms are just choosing to quietly cut costs by laying off associates so they can publicly announce during OCI that they haven't cut salaries. up to you whether that's "good" or "bad" relative to public paycuts for all. and at least at some firms, affected associates are being asked to sign nondisparagements which certainly isn't helping the flow of information.

Out the firm in the stealth layoff tracker thread. They deserve to be outed.

[2013]

Couldn’t it just be that forms with 40%+ margins are having partners decrease distributions for the time being? Those firms have extremely high PPP and can probably afford to do so. And I think someone previously mentioned that those don’t make it to ATL.

[Anonymous User]

What do we think the bad outliers (cutting costs with high profit) are doing wrong or, additionally or alternatively, the good outliers (no cut firms, or at least that have yet to cut, with profit margins comparable to those that have already cut) are doing right?

To the firms in the first category: is it about partner selfishness? Poor recession planning by going on a spree in the past couple years? Insufficiently good layoffs deals which results in associates outing the firm?

To the firms in the second category, is this about partner sacrifice? Conservative hiring during boom in anticipation of recession? Extremely stealthy stealths? An amazing first quarter?

Would like to preface all of this by saying that this is speculation and my opinion, but speaking as someone who was stealthed from the Goodwin Boston office, I think Goodwin did cuts to keep their profits high and the reason for stealths ties back to their corporate culture.

Goodwin thinks of themselves as the best firm in Boston and most of the partners I've interacted with think of themselves as the best attorneys in the nation. They are also image obsessed and are desperate for the legal community to see them in the highest esteem. They ignore the existence of Ropes and ignore that markets larger than Boston exist. That dynamic gives way to a lot of big fish in a small pond who are deeply insecure that bigger ponds exist.

Given the context above, I think they opted for stealths because they think it's clever. Why bother to do pay cuts, furloughs, or layoffs (which would require the firm to make an announcement that could taint their reputation) when you could essentially force people to quit at a fraction of the price? If you could convince the people being stealthed that it was their fault, it greatly minimizes the chances that anyone will talk (which is the point of stealths after all).

[wisdom]

What do we think the bad outliers (cutting costs with high profit) are doing wrong or, additionally or alternatively, the good outliers (no cut firms, or at least that have yet to cut, with profit margins comparable to those that have already cut) are doing right?

To the firms in the first category: is it about partner selfishness? Poor recession planning by going on a spree in the past couple years? Insufficiently good layoffs deals which results in associates outing the firm?

To the firms in the second category, is this about partner sacrifice? Conservative hiring during boom in anticipation of recession? Extremely stealthy stealths? An amazing first quarter?

I disagree with this framing because some firms may not have made a move yet but will soon. The biggest differentiation may just be firm leadership decisionmaking. Two firms may be in the exact same profitability situation, but one has leaders who decide to cut early/aggressively and the second one may have leaders in denial or hoping to survive long enough to be saved by economic recovery. We can't know who's right until we get to the end of this crisis.

It's not unlike the public health responses of different countries. Some countries with seemingly few cases took aggressive measures early, and some countries with a lot of cases are declining to take those measures or moving slowly. The difference in responses does not always track the underlying reality due to variations in leadership and other factors.

[Anonymous User]

What do we think the bad outliers (cutting costs with high profit) are doing wrong or, additionally or alternatively, the good outliers (no cut firms, or at least that have yet to cut, with profit margins comparable to those that have already cut) are doing right?

To the firms in the first category: is it about partner selfishness? Poor recession planning by going on a spree in the past couple years? Insufficiently good layoffs deals which results in associates outing the firm?

To the firms in the second category, is this about partner sacrifice? Conservative hiring during boom in anticipation of recession? Extremely stealthy stealths? An amazing first quarter?

the assumption should be that associates are being stealthed at firms that haven't announced paycuts (not that they shouldn't also be at those who have), period. i know 2 people who have been laid off in the last month from two firms that you would characterize as "good outliers" -- many firms are just choosing to quietly cut costs by laying off associates so they can publicly announce during OCI that they haven't cut salaries. up to you whether that's "good" or "bad" relative to public paycuts for all. and at least at some firms, affected associates are being asked to sign nondisparagements which certainly isn't helping the flow of information.

Not sure why anon was necessary, but that’s a seemingly valid answer. So super stealth (And likely favorably termed) layoffs combined with non disparagement/disclosure agreements.

Any idea how your friends’ performance was...or how it was viewed by the partners etc before all of this hit?

one had good reviews/relationships, or, no reason to think there was an issue. does sound like there may not have been a path forward in that practice group, though. they don't know if it's happening to others at the firm. the other person had enough issues with the firm (legitimate or not) to see it coming.

[kengh]

BakerHostetler (V65) - Alleged unspecified pay cut for associates (see viewtopic.php?f=23&t=304915&start=200#p10425206); alleged paycut not publicly reported

Was reported by ATL today.

[Excellent117]

What do we think the bad outliers (cutting costs with high profit) are doing wrong or, additionally or alternatively, the good outliers (no cut firms, or at least that have yet to cut, with profit margins comparable to those that have already cut) are doing right?

To the firms in the first category: is it about partner selfishness? Poor recession planning by going on a spree in the past couple years? Insufficiently good layoffs deals which results in associates outing the firm?

To the firms in the second category, is this about partner sacrifice? Conservative hiring during boom in anticipation of recession? Extremely stealthy stealths? An amazing first quarter?

Give it time and most (if not all) of the V100 will have cut pay, furloughed staff/attorneys, and/or conducted stealth layoffs in some form. Firms can prepare for a typical recession, even unusually bad ones like 2008, but firms simply cannot prepare for something like this.

[nahumya]

This is not a fulsome analysis, but the below data points should give you an idea:

Firms w/ Highest Profit Margins taking Austerity Measures:
--Goodwin 45%
--Boies Schiller 43%
--Baker Botts 42%
--Akerman 40%

Firms w/ Lowest Profit Margins yet to take Austerity Measures:
--Foley & Lardner 24%
--Perkins & Coie 27%
--Hunton Andrews Kurth 29%
--Steptoe 31%

Edit: If you do not count Goodwin's reported stealth layoffs or what is going on at BSF, the only firms with 40+ profit margins to take austerity measures to date are Baker Botts and Akerman.

BB is reliant on large oil and gas clients, and therefore was likely disproportionately affected. Same with V&E.

[ongtexas]

This is not a fulsome analysis, but the below data points should give you an idea:

Firms w/ Highest Profit Margins taking Austerity Measures:
--Goodwin 45%
--Boies Schiller 43%
--Baker Botts 42%
--Akerman 40%

Firms w/ Lowest Profit Margins yet to take Austerity Measures:
--Foley & Lardner 24%
--Perkins & Coie 27%
--Hunton Andrews Kurth 29%
--Steptoe 31%

Edit: If you do not count Goodwin's reported stealth layoffs or what is going on at BSF, the only firms with 40+ profit margins to take austerity measures to date are Baker Botts and Akerman.

BB is reliant on large oil and gas clients, and therefore was likely disproportionately affected. Same with V&E.

Yet BB cut 20% with 42% margins and V&E hasn’t budged with 45% margins. Any theories here? V&E partners taking one for the team?

[decimalsanddollars]

Yet BB cut 20% with 42% margins and V&E hasn’t budged with 45% margins. Any theories here? V&E partners taking one for the team?

I'm guessing V&E is generally stronger financially than BB. Note that last year BB fell on several metrics while V&E rose, and V&E is stronger in M&A than BB (which extends beyond oil and gas, even in Texas).