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Law360 (May 8, 2020, 7:32 PM EDT ) Eversheds Sutherland, Holland & Knight LLP and Pepper Hamilton LLP confirmed on Friday that they are proceeding with salary cuts and furloughs in response to the economic upheaval caused by the COVID-19 pandemic, with Pepper Hamilton also saying it plans to continue with its planned merger with Troutman Sanders LLP.
Eversheds Sutherland, a Law360 Global 20 firm, said that although it started out the year strong and was trying to reduce expenses without cutting salaries, it is now making the "difficult decision" to reduce pay for staff and attorneys making more than $50,000 by up to 10% and furlough 40 staff members, while keeping them on the firm's health insurance.
The firm also said equity partners will "bear the primary burden of any continued economic disruption," but it did not specify how much it expects partner profit distributions to decline.
"We believe these decisions, while difficult, are prudent to enable us to continue to deliver on our commitment to providing Eversheds Sutherland clients with responsive, superior service," the firm said in a statement.
Pepper Hamilton confirmed it will also cut salaries and reduce partner distributions. Non-partner attorneys will see their annual salary decline 12% for 2020, the firm said, and staff making $60,000 or more will see annualized cuts between 3% and 9%, depending on salary, the firm said.
The firm did not specify how much it is reducing partner distributions.
The firm is also continuing with its plan to merge with Troutman Sanders, which was delayed by COVID-19 from April 1 to July 1. Pepper Hamilton indicated by email that July 1 is still the expected date.
While both firms have announced they will be axing their 2020 summer associate programs, Troutman Sanders has not announced layoffs, furloughs or staffing cuts.
Pepper Hamilton and Troutman Sanders have been going different directions in headcount in recent years, according to rankings data from the annual Law360 400. Those reports show Troutman Sanders growing from 595 attorneys in 2014 to 672 in the 2019 report.
Pepper Hamilton, on the other hand, has been shrinking, going from the 78th largest law firm in the U.S. in 2014 with 530 attorneys to the 103rd largest firm with 462 attorneys in 2019.
Holland Knight also announced pay cuts and staff furloughs on Friday, saying partner draws will be cut by about 25%, with high-earning partners taking the biggest hit. Other attorneys will see salaries cut 17.5%, and staff earning $75,000 or more will see pay cut by 10% to 15%, depending on their salary, the firm said.
The firm has also furloughed an unspecified number of staff members, though it said staff will keep their benefits during the furlough.
The changes will stay in effect for at least 60 days, the firm said.
"The firm entered the current crisis in a strong financial position. Nevertheless, it is not immune from the effects of the economic downturn," Steven Sonberg, the firm's managing partner, said in a statement. "In order to meet the challenges we face, we are asking all members of Holland & Knight to sacrifice in some way as the firm continues to evaluate its operations."
--Editing by Amy Rowe.
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