Large firms in the UK are taking fundamentally different approaches to cutting the pay of their workforces to deal with the impact of COVID-19. While some are expecting staff to carry on working for five days a week with the same billing targets, others are bringing in commensurate reductions in working hours and targets.
London firm Fladgate has reduced associates' salaries by 20%, said sources, but has not reduced their working week from five days to four. "Oh and billable targets remain the same", said one of its lawyers. "Nice. #fladgatefamily". The firm did not respond to a request for comment.
Hill Dickinson has asked all staff earning £30k or more to accept a 20% pay cut. "And we’re all still expected to work the same hours/meet the same targets". Responses were required by Thursday, "but information provided from the CEO suggests it will be implemented for everyone if the 'majority' agree, even though that would obviously require them to breach the contracts of those that did not agree". In response to RollOnFriday's query, the Liverpool-based firm issued a press release confirming that all staff are being asked to reduce their pay by 20% for two months, and that annual pay reviews in May will be postponed until later in the year.
CEO Peter Jackson said the firm "has seen sustained growth over the last two years", was in a "strong financial position", and "many of our teams are still very busy". But "nevertheless, we are making some prudent changes to reflect the uncertain outlook in the global economy and the pressures some of our clients are feeling".
Eversheds Sutherland in Ireland, which is not part of the Eversheds Sutherland International LLP, has brought in 20% salary cuts for almost everyone in its offices in Dublin and Belfast, and larger graduated cuts for those earning over €80,000. Contractual terms and conditions will remain the same, said a spokesperson.
She told RollOnFriday that the measures, which take effect on 27 April and don't apply to the rest of Eversheds Sutherland, will see senior partners "taking the most significant overall reduction in salary".
"Due to the current unprecedented situation we have found ourselves in, we needed to prepare our business for the next few months rather than weeks and make some short term tough decisions to ensure long term sustainability", said the spokesperson. "All reductions are difficult and aren’t made without much thought and consideration but from our own market information the reductions made by Eversheds Sutherland are at mid- level".
"A number of Dublin based law firms have made significantly higher cuts across their businesses in addition to taking other measures, which we did not take", she added.
An insider expressed unease about the firm taking advantage of the furlough scheme in Belfast and wage subsidy scheme in Dublin, and about the pay cuts, when its financial state was opaque. "I accept no layoffs were introduced which is a positive", they said, "and I don't want to suggest that firms are not affected (work has dropped off and cash in is a difficulty)", but law firms in Ireland "are very secretive about profits" and "there is a serious sense that the extent of such cuts is somewhat of an overreach for otherwise extremely profitable firms without a fully explained basis and facts and figures". A spokesperson responded that the measures taken were intended "to protect the jobs and the long term strength of the business".
Major Scottish firm Anderson Strathern has brought in a 10% pay cut for all working staff. It has also furloughed over 60 people, without topping up their pay, "despite a published 28% increase in profits in 2019", said a source. Those still working are expected to do as much as before.
"Staff morale is understandably low, with a particular bone of contention being the regular threatening emails about time recording and meeting targets", said an Anderson Strathern insider. Partners are understood to have taken a 10% cut as well, having declined to defer their distributions. The firm did not respond to a request for comment.
Fieldfisher's quieter teams have been made to work 4 days a week, said a source at the firm. Everyone else who earns over £50k is seeing a 10% pay cut between 1 June and 31 August, said the source, adding, "They’ve said it’s by consent but if we don’t agree the firm will force us". Surely not.
Every email in 2020.
Other firms are matching the new, reduced pay with new, reduced hours, following the lead of Norton Rose Fulbright. Instead of sweating their assets for less, they appear to be seeking to genuinely reflect anticipated downturns in work while continuing to pay staff as much, pro rata, as they were before the pandemic struck.
Mishcon De Reya is one such firm. James Libson, its new managing partner, sent a firm-wide email last Friday asking all employees to consent to a reduction in hours and pay by up to 30%, to be potentially exercised at some point in the future. The plan could see Mishcon's lawyers working a 3.5 day week.
Libson told RollOnFriday, "In response to the COVID-19 crisis, we have made a series of prudent decisions in order to protect our business, preserve jobs and continue to service our clients fully. Many of these decisions have been difficult to make".
They include requiring partners to make considerable adjustments. The firm has reduced their drawings by between 15% and 50%, and all profit distributions have been frozen "until further notice".
"In line with our core values, it will always be our policy that our Partners bear the lion's share of any cuts we deem appropriate to protect our business", said Libson.
The firm has also furloughed some staff "who cannot do their job in the current environment, as well as those in areas of the firm where work has reduced because of the crisis".
"We do not anticipate taking further steps", said Libson. "However, in case the climate and therefore the threat to our business worsens we will also be asking everyone in the firm to sign up to reduced working hours and pay. This move to reduce working hours and pay by up to 30% would only be contemplated if market conditions dictated and we had already asked the Partners to take further reductions".
Highly-placed insiders at Pinsent Masons told RollOnFriday the partnership is investigating a similarly reduced working week with a pro rata reduction in pay. A partner call was held on Wednesday morning discussing the move, with measures expected to be announced internally in the next few days. One source, who presumably works in restructuring, queried the statagem. "Some teams (including mine) have more work on than they can do in 5 days, let alone 4", they said. Ooh, get you.
Dentons is also reducing work alongside pay, but only for those who volunteer. It is asking employees in its UK offices to agree to "flexible reduced work patterns" for six months from 1 June. The starting point is a four-day week, with a proportionate 20% reduction in salary, but the scheme is malleable. "It can be applied across different periods in different teams to respond to client needs, workflows and individual choices", said a spokesperson.
Dentons partners are taking a sizeable hit. Partner distributions are being deferred and drawings are being reduced by 20% for six months. And they have to continue with full working weeks.
UK and Middle East CEO Jeremy Cohen said, "The impact of the pandemic could be longer or shorter, deeper or shallower than we currently anticipate. While our work patterns have held up reasonably well so far, all the economic indicators point towards an unprecedented contraction of global GDP over the coming months. We are therefore taking these pre-emptive measures as the most prudent course of action".
Dentons has also furloughed "a number of employees who are unable to effectively work remotely, or from teams where full capacity is not currently required", and is topping up their salaries to 100%.
Clifford Chance is taking a markedly different approach to all the above. While it has put salary reviews on hold and deferred partnership profit distribution, it has no plans for four-day weeks, or pay cuts, or furloughs. And bonuses will be paid, although larger ones are being split in two with the second instalment payable in November.
"We are a strong and resilient organisation, with over five years of robust global growth behind us", said a spokesperson. "Our teams are always a source of huge pride, they are fantastically talented, motivated and collaborative, and never more so since the virus has begun to spread. Over the coming months our aim is to keep these teams together and to work shoulder to shoulder with our clients who need our support now more than ever". Brings a tear to the eye, so it does.