The coronavirus has bitten the revenues and bottom lines for Big Law firms as a range of practices take major measures to reduce the impact of the pandemic on revenues and profits and the prospects of layoffs rises.
Cadwalader, Wickersham & Taft has cut compensation for associates and other employees by up to 25 per cent.
Patrick Quinn, Cadwalader’s managing partner, told employees in an email on Tuesday that “partners have been told not to expect any distributions during the peak months of the crisis” and that pay for legal staff, including associates, counsel and special counsel, and senior administrative staff will be cut by 25 per cent for approximately the next four months.
Allen & Overy has deferred bonus payments and called for partners to make capital contributions to help protect itself.
The firm is having a cash call and also reducing partner profit distributions, as well as freezing associate and other salaries. It reportedly will also not undertake annual salary reviews that are due in the first quarter of the financial year.
“The COVID-19 global crisis is an unprecedented situation for us and our clients,” Allen & Overy said in the statement. “The firm is in a very strong financial position but given the unknown nature of the evolving challenges, and their long term impact on our markets, it is sensible to introduce some prudent management measures as part of our ongoing scenario planning.
Plus Other Pandemic Moves
A raft of other law firms are also taking moves to minimize the impact of the pandemic, including Reed Smith, which is reducing partner distributions.
Linklaters, Pinsent Masons and Fieldfisher are considering either reducing or delaying profit distributions to partners.
Indeed almost all major law firms are taking actions to ensure their financial viability. Generally the consideration of bonus payment and redundancies, as well as recruitment plans, are all major issues for law firms.
Most lawyers are saying they expect redundancies and expect some sort of radical restructuring of practices in the wake of the coronavirus pandemic and the impact of layoffs for lawyers.
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