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

[Ultramar vistas]

"[W]hile salary cuts shore up a firm’s finances, they don’t fix the underlying problem: too many lawyers, specifically more lawyers than can be kept growing professionally at the required pace given the volume of work available to them. With the level of U.S. economic activity not expected to regain its Q4 2019 level until the first half of 2022, this is more than a short-term challenge. Unchecked, it creates a post-recession existential risk for firms: clients decamping to rivals to avoid being served by under-experienced associate cohorts. Hence, we should expect layoffs when lawyers return to their offices (you can’t reasonably lay someone off over Zoom)." by Hugh Simons the COO of Ropes & Gray. https://www.law.com/2020/05/15/as-salar ... ppens-next

LOL what a clickbait.

As a couple of posters noted, this guy retired ~4 years ago and writes about the law business as a hobby and "does some consulting for old friends." https://www.linkedin.com/in/hugh-a-simons-153a839/

Every time I’ve read one of his awful articles he strikes me as someone who desperately wanted to limit associate salaries, slash benefits, and eliminate fun summer events while he was the Ropes COO, but was unable to buck the industry trends.

Now, he’s trying to will it into being writing op eds.

I think in his article at the height of the flurry of reduced pay announcements he predicted with a straight face based on some back of the envelope math that 15% of the AmLaw100 would have to shutter or something absurd. Such unnecessary panic mongering.

[Sprinkler]

How is it that firms earning over billion dollars are cutting pay and firms earning notably less are not making cuts? Please explain.

[Auxilio]

How is it that firms earning over billion dollars are cutting pay and firms earning notably less are not making cuts? Please explain.

Because despite ATL's insane choice to focus on that metric for some reason, it's not really relevant. What's relevant is profit, revenue per lawyer, cash on hand etc.

It doesn't matter how big you are if you don't have any room for reduced revenue.

[nahumya]

How is it that firms earning over billion dollars are cutting pay and firms earning notably less are not making cuts? Please explain.

Not sure whether you are trolling there. Total revenue without accounting for headcount is meaningless as an indicator of financial health. A 1-lawyer firm bringing $10m in revenue is more financially resilient than a 10-lawyer firm bringing $11m in revenue.

[wisdom]

Just when you thought there'd be no more news this week:

https://abovethelaw.com/2020/05/announc ... ssociates/

Troutman Sanders, Vault No. 91, 20% pay cut going forward

[Anonymous User]

How is it that firms earning over billion dollars are cutting pay and firms earning notably less are not making cuts? Please explain.

Not sure whether you are trolling there. Total revenue without accounting for headcount is meaningless as an indicator of financial health. A 1-lawyer firm bringing $10m in revenue is more financially resilient than a 10-lawyer firm bringing $11m in revenue.

Agreed - the firms shedding associates and cutting pay are over-leveraged. They hired too many attorneys and expanded too fast.

[Anonymous User]

Heard a rumor today that Honigman let some associates go.

[Sackboy]

Agreed - the firms shedding associates and cutting pay are over-leveraged. They hired too many attorneys and expanded too fast.

In some cases, this is probably true. In most cases, I imagine that firms have just lost too much business in their main practice areas and due to too low of profit margins don't really have the reserves to deal with it without austerity measures.

[Pomeranian]

Assuming the economy doesn’t rebound by the end of the year, will firms cut salaries again (on top of the already reduced salaries), or just lay people off aggressively at this point?

[jarofsoup]

I think firms are already stealthing. There is slow like an associate is only billing 120 hours a month and then there are people billing 0 hours a month. If you are billing 0 the firm can’t carry that for very long.

[JusticeSquee]

Assuming the economy doesn’t rebound by the end of the year, will firms cut salaries again (on top of the already reduced salaries), or just lay people off aggressively at this point?

Layoffs will begin. The salary reduction is really just a market correction. Most firms had no business moving to $190K when they did. It was just a bad case of keeping up with the Joneses. But now that the market is hurting, mid- and low-tier firms (financially speaking) can no longer keep up with the top-tier.

Cravath, Kirkland, Simpson, Milbank, SullCrom, Skadden, et al. will not reduce salaries, they are financially healthy firms. They will stealth some associates in slow practice groups. Less financially healthy firms will lower salaries (because they were never in a position to raise them in the first place) and stealth a portion of the associate class. Sadly, this pandemic will separate the haves from the have-nots in biglaw and a lot of associates will face some choppy seas up ahead.

[parkslope]

Assuming the economy doesn’t rebound by the end of the year, will firms cut salaries again (on top of the already reduced salaries), or just lay people off aggressively at this point?

Layoffs will begin. The salary reduction is really just a market correction. Most firms had no business moving to $190K when they did. It was just a bad case of keeping up with the Joneses. But now that the market is hurting, mid- and low-tier firms (financially speaking) can no longer keep up with the top-tier.

Cravath, Kirkland, Simpson, Milbank, SullCrom, Skadden, et al. will not reduce salaries, they are financially healthy firms. They will stealth some associates in slow practice groups. Less financially healthy firms will lower salaries (because they were never in a position to raise them in the first place) and stealth a portion of the associate class. Sadly, this pandemic will separate the haves from the have-nots in biglaw and a lot of associates will face some choppy seas up ahead.

I agree, a market correction was due at some point. It's nuts that firms making $1.5 million RPL pay the same as firms making $1 million RPL. That's 50% more. The big NY money firms SHOULD be paying more because (a) you do work harder and (b) they make so much more money.

It seems that the trend of public announcements of salary cuts has slowed considerably. Maybe all the firms that were going to do it already have. Then we move into the next phase, which would be (a) stealthing everywhere and (b) some public layoffs from firms that are really struggling.

[ghostoftraynor]

Assuming the economy doesn’t rebound by the end of the year, will firms cut salaries again (on top of the already reduced salaries), or just lay people off aggressively at this point?

Layoffs will begin. The salary reduction is really just a market correction. Most firms had no business moving to $190K when they did. It was just a bad case of keeping up with the Joneses. But now that the market is hurting, mid- and low-tier firms (financially speaking) can no longer keep up with the top-tier.

Cravath, Kirkland, Simpson, Milbank, SullCrom, Skadden, et al. will not reduce salaries, they are financially healthy firms. They will stealth some associates in slow practice groups. Less financially healthy firms will lower salaries (because they were never in a position to raise them in the first place) and stealth a portion of the associate class. Sadly, this pandemic will separate the haves from the have-nots in biglaw and a lot of associates will face some choppy seas up ahead.

I agree, a market correction was due at some point. It's nuts that firms making $1.5 million RPL pay the same as firms making $1 million RPL. That's 50% more. The big NY money firms SHOULD be paying more because (a) you do work harder and (b) they make so much more money.

It seems that the trend of public announcements of salary cuts has slowed considerably. Maybe all the firms that were going to do it already have. Then we move into the next phase, which would be (a) stealthing everywhere and (b) some public layoffs from firms that are really struggling.

I think it really depends on how the reopenings play out. Most places are pretty open and we haven't seen crazy spikes yet. Some industries are going to remain completely devastated (restaurants and travel), but could see much of the economy returning to normalish. If that plays out, think most of the firms that will do anything have, although there could be a few others still limping along.

If the optimistic path doesn't play out, think we will see additional firms reducing salaries and more layoffs.

[Anonymous User]

I’m at a V30 in a non-NY major market. My firm announced in April that there would not be layoffs, pay cuts, furloughs, etc. but that performance-based terminations would proceed as usual. Two associates in litigation-based groups in my office were terminated this month. Both billed under 1,500 hours in 2019 and were on pace for even fewer hours in 2020, so I think these are legitimately performance-based and not stealth layoffs (one had a reputation for poor work product and the other was known to dodge assignments). They probably could have kept coasting in a better economy, but it’s my understanding that the firm has accelerated the performance-based terminations. Not 100% sure, but I think they get 3 months of pay/website time, and potentially longer on the website if needed.

[Anonymous User]

I’m at a V30 in a non-NY major market. My firm announced in April that there would not be layoffs, pay cuts, furloughs, etc. but that performance-based terminations would proceed as usual. Two associates in litigation-based groups in my office were terminated this month. Both billed under 1,500 hours in 2019 and were on pace for even fewer hours in 2020, so I think these are legitimately performance-based and not stealth layoffs (one had a reputation for poor work product and the other was known to dodge assignments). They probably could have kept coasting in a better economy, but it’s my understanding that the firm has accelerated the performance-based terminations. Not 100% sure, but I think they get 3 months of pay/website time, and potentially longer on the website if needed.

Thank you -- what year level were these associates?

[Anonymous User]

I’m at a V30 in a non-NY major market. My firm announced in April that there would not be layoffs, pay cuts, furloughs, etc. but that performance-based terminations would proceed as usual. Two associates in litigation-based groups in my office were terminated this month. Both billed under 1,500 hours in 2019 and were on pace for even fewer hours in 2020, so I think these are legitimately performance-based and not stealth layoffs (one had a reputation for poor work product and the other was known to dodge assignments). They probably could have kept coasting in a better economy, but it’s my understanding that the firm has accelerated the performance-based terminations. Not 100% sure, but I think they get 3 months of pay/website time, and potentially longer on the website if needed.

Thank you -- what year level were these associates?

One junior (2-3 yr) and one more senior (5-7 yr).

[Wild Card]

Troutman Sanders (V91): 20% paycut for associates

Boies Schiller (V24): moving to market scale salary structure

https://www.law.com/2020/05/29/boies-sc ... te-scheme/

--

Stroock (formerly V100ish): 15% paycut for associates

https://abovethelaw.com/2020/05/stroock-cuts/

[Sackboy]

Troutman Sanders (V91): 20% paycut for associates

Boies Schiller (V24): moving to market scale salary structure

https://www.law.com/2020/05/29/boies-sc ... te-scheme/

--

Stroock (formerly V100ish): 15% paycut for associates

https://abovethelaw.com/2020/05/stroock-cuts/

This pretty much finishes off the V90-100 category, because the remaining firm in that category is unlike the others: Kellogg, Hansen.

BSF move has to be pretty demoralizing for associates. You know your 15% pay cut is very likely to revert when the madness is done, but a change to the entire bonus structure could very well stay. Now, instead of pulling in a possible $150k+ bonus, like some past reported BSF bonuses, you could be stuck with a class year bonus of $50k. Ouch.

[Anonymous User]

Troutman Sanders (V91): 20% paycut for associates

Boies Schiller (V24): moving to market scale salary structure

https://www.law.com/2020/05/29/boies-sc ... te-scheme/

--

Stroock (formerly V100ish): 15% paycut for associates

https://abovethelaw.com/2020/05/stroock-cuts/

This pretty much finishes off the V90-100 category, because the remaining firm in that category is unlike the others: Kellogg, Hansen.

BSF move has to be pretty demoralizing for associates. You know your 15% pay cut is very likely to revert when the madness is done, but a change to the entire bonus structure could very well stay. Now, instead of pulling in a possible $150k+ bonus, like some past reported BSF bonuses, you could be stuck with a class year bonus of $50k. Ouch.

Ouch indeed. The above-market bonuses were obviously the biggest draw for many associates. Especially given the demands at BSF, as I would venture the firm's billable hours are on average higher than V5 litigation. I spoke with an associate there who said 250/month was the expected amount of hours. Sure, you might get more substantive experience at BSF. But I think competitive candidates, especially those coming off top clerkships, will shy away from BSF (as was predicted on this site a few months ago, actually). Why go to BSF when you could go to Susman, Molo, WW, or one of the traditional big shops? It's a dying firm.

[Anonymous User]

Troutman Sanders (V91): 20% paycut for associates

Boies Schiller (V24): moving to market scale salary structure

https://www.law.com/2020/05/29/boies-sc ... te-scheme/

--

Stroock (formerly V100ish): 15% paycut for associates

https://abovethelaw.com/2020/05/stroock-cuts/

This pretty much finishes off the V90-100 category, because the remaining firm in that category is unlike the others: Kellogg, Hansen.

BSF move has to be pretty demoralizing for associates. You know your 15% pay cut is very likely to revert when the madness is done, but a change to the entire bonus structure could very well stay. Now, instead of pulling in a possible $150k+ bonus, like some past reported BSF bonuses, you could be stuck with a class year bonus of $50k. Ouch.

Ouch indeed. The above-market bonuses were obviously the biggest draw for many associates. Especially given the demands at BSF, as I would venture the firm's billable hours are on average higher than V5 litigation. I spoke with an associate there who said 250/month was the expected amount of hours. Sure, you might get more substantive experience at BSF. But I think competitive candidates, especially those coming off top clerkships, will shy away from BSF (as was predicted on this site a few months ago, actually). Why go to BSF when you could go to Susman, Molo, WW, or one of the traditional big shops? It's a dying firm.

Can verify that many BSF associates are demoralized by this. While some associates in the non-New York offices had wanted to change the compensation system, anyone in the NY office (or really anyone who billed at the level of a top boutique, which is what BSF says it is) is going to get a reduction in total pay. Some of this is business related (like many firms, BSF is struggling to bring in new work these days), but some of it is also that the new partners in charge just felt that NY associates were overpaid and, generally, just not worth the money even though they were working harder and longer than folks in other offices.

When you add in how notoriously cheap BSF it re perks and day-to-day financial support (no WFH budget provided during Covid-19, no offices for associates, etc.), I can't imagine top-quality folks from top-quality clerkships or law schools will find BSF nearly as attractive now, given the other options those people have at places like Susman, Kellogg, WLRK, or even Quinn, WW, Molo, etc. But I think the new crop of managing partners don't really care about that. They feel associates are replaceable and fungible.

ETA: funny thing is, BSF leadership still thinks it's somehow a "market leader" in associate comp when it is clearly now a market follower. I'd think David Boies himself would be embarrassed at the direction of the firm.

[Anonymous User]

Troutman Sanders (V91): 20% paycut for associates

Boies Schiller (V24): moving to market scale salary structure

https://www.law.com/2020/05/29/boies-sc ... te-scheme/

--

Stroock (formerly V100ish): 15% paycut for associates

https://abovethelaw.com/2020/05/stroock-cuts/

This pretty much finishes off the V90-100 category, because the remaining firm in that category is unlike the others: Kellogg, Hansen.

BSF move has to be pretty demoralizing for associates. You know your 15% pay cut is very likely to revert when the madness is done, but a change to the entire bonus structure could very well stay. Now, instead of pulling in a possible $150k+ bonus, like some past reported BSF bonuses, you could be stuck with a class year bonus of $50k. Ouch.

Ouch indeed. The above-market bonuses were obviously the biggest draw for many associates. Especially given the demands at BSF, as I would venture the firm's billable hours are on average higher than V5 litigation. I spoke with an associate there who said 250/month was the expected amount of hours. Sure, you might get more substantive experience at BSF. But I think competitive candidates, especially those coming off top clerkships, will shy away from BSF (as was predicted on this site a few months ago, actually). Why go to BSF when you could go to Susman, Molo, WW, or one of the traditional big shops? It's a dying firm.

Can verify that many BSF associates are demoralized by this. While some associates in the non-New York offices had wanted to change the compensation system, anyone in the NY office (or really anyone who billed at the level of a top boutique, which is what BSF says it is) is going to get a reduction in total pay. Some of this is business related (like many firms, BSF is struggling to bring in new work these days), but some of it is also that the new partners in charge just felt that NY associates were overpaid and, generally, just not worth the money even though they were working harder and longer than folks in other offices.

When you add in how notoriously cheap BSF it re perks and day-to-day financial support (no WFH budget provided during Covid-19, no offices for associates, etc.), I can't imagine top-quality folks from top-quality clerkships or law schools will find BSF nearly as attractive now, given the other options those people have at places like Susman, Kellogg, WLRK, or even Quinn, WW, Molo, etc. But I think the new crop of managing partners don't really care about that. They feel associates are replaceable and fungible.

ETA: funny thing is, BSF leadership still thinks it's somehow a "market leader" in associate comp when it is clearly now a market follower. I'd think David Boies himself would be embarrassed at the direction of the firm.

The article seems to indicate that associates can choose to remain with the current system, is that going to be phased out eventually? I'm not sure why any first or second year associate would voluntarily choose a market bonus, but I can see why someone more senior would, but the tone of the article and your post very much seems to indicate that they're trying to get to the point of scrapping the previous bonus system completely.

[Anonymous User]

Troutman Sanders (V91): 20% paycut for associates

Boies Schiller (V24): moving to market scale salary structure

https://www.law.com/2020/05/29/boies-sc ... te-scheme/

--

Stroock (formerly V100ish): 15% paycut for associates

https://abovethelaw.com/2020/05/stroock-cuts/

This pretty much finishes off the V90-100 category, because the remaining firm in that category is unlike the others: Kellogg, Hansen.

BSF move has to be pretty demoralizing for associates. You know your 15% pay cut is very likely to revert when the madness is done, but a change to the entire bonus structure could very well stay. Now, instead of pulling in a possible $150k+ bonus, like some past reported BSF bonuses, you could be stuck with a class year bonus of $50k. Ouch.

Ouch indeed. The above-market bonuses were obviously the biggest draw for many associates. Especially given the demands at BSF, as I would venture the firm's billable hours are on average higher than V5 litigation. I spoke with an associate there who said 250/month was the expected amount of hours. Sure, you might get more substantive experience at BSF. But I think competitive candidates, especially those coming off top clerkships, will shy away from BSF (as was predicted on this site a few months ago, actually). Why go to BSF when you could go to Susman, Molo, WW, or one of the traditional big shops? It's a dying firm.

Can verify that many BSF associates are demoralized by this. While some associates in the non-New York offices had wanted to change the compensation system, anyone in the NY office (or really anyone who billed at the level of a top boutique, which is what BSF says it is) is going to get a reduction in total pay. Some of this is business related (like many firms, BSF is struggling to bring in new work these days), but some of it is also that the new partners in charge just felt that NY associates were overpaid and, generally, just not worth the money even though they were working harder and longer than folks in other offices.

When you add in how notoriously cheap BSF it re perks and day-to-day financial support (no WFH budget provided during Covid-19, no offices for associates, etc.), I can't imagine top-quality folks from top-quality clerkships or law schools will find BSF nearly as attractive now, given the other options those people have at places like Susman, Kellogg, WLRK, or even Quinn, WW, Molo, etc. But I think the new crop of managing partners don't really care about that. They feel associates are replaceable and fungible.

ETA: funny thing is, BSF leadership still thinks it's somehow a "market leader" in associate comp when it is clearly now a market follower. I'd think David Boies himself would be embarrassed at the direction of the firm.

The article seems to indicate that associates can choose to remain with the current system, is that going to be phased out eventually? I'm not sure why any first or second year associate would voluntarily choose a market bonus, but I can see why someone more senior would, but the tone of the article and your post very much seems to indicate that they're trying to get to the point of scrapping the previous bonus system completely.

Correct. Giving associates that choice during Covid-19 is a convenient way to make that transition faster. (Juniors might choose the new system because there's just not enough work to be able to benefit from the old system, which paid higher only if you could bill a lot. They just don't have the work (or, I'm guessing, the realization rates) these days to pull that off anymore.) What's ironic is that the new system has an hours threshold, too, so unlike elite firms where you don't have to worry about hours, BSF associates now have no way of avoiding it.

[beepboopbeep]

Wasn't part of the reason BSF could do bigger bonuses is it did more cases on the left side of the v, compared to other boutiques (other than Susman, which similarly does more Plaintiff's-wide work and also has above-market bonuses)? That was at least part of the story when I was going through OCI, though that was several years ago. I wouldn't imagine that work would be drying up so much -- if anything I'd imagine there's some opportunity there.

[Anonymous User]

Troutman Sanders (V91): 20% paycut for associates

Boies Schiller (V24): moving to market scale salary structure

https://www.law.com/2020/05/29/boies-sc ... te-scheme/

--

Stroock (formerly V100ish): 15% paycut for associates

https://abovethelaw.com/2020/05/stroock-cuts/

This pretty much finishes off the V90-100 category, because the remaining firm in that category is unlike the others: Kellogg, Hansen.

BSF move has to be pretty demoralizing for associates. You know your 15% pay cut is very likely to revert when the madness is done, but a change to the entire bonus structure could very well stay. Now, instead of pulling in a possible $150k+ bonus, like some past reported BSF bonuses, you could be stuck with a class year bonus of $50k. Ouch.

Ouch indeed. The above-market bonuses were obviously the biggest draw for many associates. Especially given the demands at BSF, as I would venture the firm's billable hours are on average higher than V5 litigation. I spoke with an associate there who said 250/month was the expected amount of hours. Sure, you might get more substantive experience at BSF. But I think competitive candidates, especially those coming off top clerkships, will shy away from BSF (as was predicted on this site a few months ago, actually). Why go to BSF when you could go to Susman, Molo, WW, or one of the traditional big shops? It's a dying firm.

Can verify that many BSF associates are demoralized by this. While some associates in the non-New York offices had wanted to change the compensation system, anyone in the NY office (or really anyone who billed at the level of a top boutique, which is what BSF says it is) is going to get a reduction in total pay. Some of this is business related (like many firms, BSF is struggling to bring in new work these days), but some of it is also that the new partners in charge just felt that NY associates were overpaid and, generally, just not worth the money even though they were working harder and longer than folks in other offices.

When you add in how notoriously cheap BSF it re perks and day-to-day financial support (no WFH budget provided during Covid-19, no offices for associates, etc.), I can't imagine top-quality folks from top-quality clerkships or law schools will find BSF nearly as attractive now, given the other options those people have at places like Susman, Kellogg, WLRK, or even Quinn, WW, Molo, etc. But I think the new crop of managing partners don't really care about that. They feel associates are replaceable and fungible.

ETA: funny thing is, BSF leadership still thinks it's somehow a "market leader" in associate comp when it is clearly now a market follower. I'd think David Boies himself would be embarrassed at the direction of the firm.

Boies Schiller doesn't have offices for associates???

[BrainsyK]

Boies Schiller doesn't have offices for associates???

I believe that as part of their move to Hudson Yards, they went with a bullpen workspace rather than individual or shared offices.