Robinson & Cole Announces Salary Cuts
By DOUGLAS S. MALAN
Some firms are laying off lawyers. Others are postponing incoming associate classes. Now another form of budget-cutting seems to be taking hold at law firms – slashing salaries for associates.
And that fledgling trend has come to Connecticut.
On Wednesday, Hartford-based Robinson & Cole, which has about 240 attorneys, confirmed that it has decided to cut associates’ and counsel’s annual salaries by $10,000. The pay cuts are effective immediately and affect incoming and current associates and counsel in all nine offices in the Northeast and Florida.
Discussions about salary cuts began last month, according to Anne Elvgren, chief marketing officer at Robinson & Cole.
The news comes on the heels of the firm’s expansion in New England. Last week, Robinson & Cole announced that it is opening a five-lawyer office in Providence on the strength of two lateral partner hires from Nixon Peabody.
John B. Lynch Jr. officially took over as Robinson & Cole’s managing partner in March when he replaced Eric Daniels, who went back to his full-time practice at the firm after nine years at the helm. Shortly after Lynch took the reins, Robinson & Cole cut 11 associate and counsel positions as well as 19 support staff positions, primarily in Hartford and Stamford. Most of the cuts were tied to the firm’s real estate and land use practice areas.
That decision came about five months after Robinson & Cole hired 34 attorneys and 17 staffers across several practice areas when the Hartford office of Thelen LLP dissolved; however, one attorney and staffer from Thelen were let go in March.
When the firm announced those layoffs last month, it said that incoming summer and fall associates would not be affected by the cuts. But now, they will be looking at a smaller compensation package.
Starting salaries vary by office, according to law firm officials, but entry-level attorneys earn $115,000 at Robinson & Cole, according to information the firm provided to NALP, the association for legal career professionals.
Lynch declined comment for this story.
Topping Out
It was barely two years ago when all the talk in the legal industry was that associate salaries had run amok, reaching $160,000 at the top firms in some markets, including Connecticut. At the time, a few people worried aloud that the skyrocketing associates’ salaries were driving up fees, and that business clients were starting to balk.
By this time last year, there was talk of salaries stagnating as the economic slowdown began to take hold. “We do not currently expect dramatic changes to the Connecticut compensation market,” Claire Papanastasiou, spokeswoman for Bingham McCutchen, said in March 2008.
But then Wall Street collapsed last fall and each month has seen a succession of law firm layoffs, including several hundred legal professionals in Connecticut. The next step seems to be salary cuts, with firms in Los Angeles and Virginia among the first to announce that the $160,000 summit was being scaled down to $144,000 or $145,000.
A firm in the AmLaw 200’s top 10 to 15 will likely never take such a step for competitive reasons, consultant Peter Zeughauser told The Recorder, a California-based legal publication owned by the same company as the Law Tribune. It's the firms in the top 30 or 40 that may move the market, and they will do it only if they've “exhausted all other options,” Zenghauser said.
The international firm of McKenna Long & Aldridge has ranked around 100 or so on the latest AmLaw lists. On Tuesday, it announced it will reduce salaries for new associates from $145,000 to $125,000.
With 12 new associates set to start in the fall, the $20,000 cut should save the Atlanta-based firm $240,000 annually. That number goes up when one factors in the lower pay for 25 summer associates, whose pay is based on first-year salaries.
McKenna's chairman Jeffrey K. Haidet sounded just as interested in satisfying clients as in saving cash. “They could not see that those salary increases were a rational decision, and they were concerned that that irrationality was being passed onto them,” Haidet told the Daily Report in Fulton County, Ga., another sister paper of the Law Tribune.
Some McKenna clients had already responded to news about the pay cuts by sending messages such as “well done” and “that's a move in the right direction,” said Haidet.
He noted that for the past two years, the firm has issued raises based on merit rather than years out of law school. “We didn't have to put in place firmwide salary freezes,” Haidet said. “To me, that's the good side of a merit-based compensation system.”
‘A Nanosecond’
Law firms in the Philadelphia region have also broached the associate pay topic, according to the Legal Intelligencer, another Law Tribune sibling. The Pennsylvania paper reported that although most firms are talking about it, many in leadership positions have made it clear they wouldn't want to be the first.
Philadelphia’s Wolf Block cut associate salaries 10 percent across the board in February. That ultimately proved too little, too late given the firm's vote last month to dissolve. A leader of a different law firm said, referring to associates salaries: “I could see $145,000 go to $100,000 in a nanosecond.”
The issue of first-year associate salaries may be a non-issue for many firms, however, as several have announced they aren't bringing in first-year associates in 2009. So it could be the existing ranks that are left to feel the brunt of compensation cuts. “I don't think it is cataclysmic,” said another Pennsylvania law firm leader. “It's just a market correction.”
Lisa R. Smith, a consultant with Hildebrandt International, a New Jersey-based consulting firm, said law firms are looking at a variety of options regarding salaries. One camp has looked to cut back incoming associates' salaries and then keep all existing associates at their current levels. A few firms have cut salaries at all associate levels, but have increased the bonus pool to compensate for those reductions, all in an effort to move toward a more merit-based compensation system, Smith said.
“This is an opportunity for some firms to rethink the salary structure, which has potentially gotten a little out of taste with the value” of certain attorney levels, Smith said.
On the whole, Smith said it is important to keep these changes in perspective. She said firms aren't just taking the bad economy out on the associates. Partner compensation has been noticeably affected as well. “It's really widespread,” Smith said.•
HOME
