Biglaw Firm Goes With Good News/Bad News Approach For COVID Austerity Measures

Mostly good news... except for those laid off.

Another Biglaw firm finds itself out of the woods caused by the economic downturn brought on by COVID-19. After instituting austerity measures months ago, Sheppard Mullin — a firm that placed 54th on the latest Am Law 100 ranking — is rolling back those measures. But it’s not all good news.

In the spring, Sheppard Mullin went through two rounds of austerity measures, first furloughing staff and then cutting all of its employees’ salaries. Those cuts were initially 12 percent for associates, special counsel, and staff attorneys, while staff members making more than $90,000 had cuts of 10 percent and staff members making between $70,000 and $90,000 saw their salaries cut by 5 percent. The firm said the partner cuts would be at a “meaningfully greater percentage.” Then in August, it began the process of rolling back the austerity measures, and the amount of the salary cuts were reduced, but, at the time, the firm anticipated those reductions would last throughout 2020.

Yesterday, the firm held a town hall meeting and announced that those existing salary cuts would be rolled back. And, in their October 16th paychecks, employees would receive make-whole payments for their lost income:

That’s great news! But, as confirmed in a follow-up email from firm Chair, Guy Halgren (available in full on the next page), the firm will also be laying off some staff members:

Due to the pandemic and limited expected office usage for a continued period into the future, we have now determined we will not have jobs for 22 of the 44 furloughed people.  These positions will be eliminated as a reduction-in-force with a severance package and medical insurance paid through year-end.  The other 22 for whom we may have a job at an unknown point in the future will be offered the opportunity to opt into the same severance package on a voluntary basis. If they would rather stay on furlough we will continue to pay for their medical insurance at least through year-end.  The severance package is one week of salary per year of service, capped at 26 weeks and with a minimum of four weeks.  The Executive Committee’s decisions regarding our furloughed staff were difficult, but we have always strived to be transparent, and it is critical folks know where they stand.

As always, best of luck to those who find themselves out of work during this trying time.

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If your firm or organization is slashing salaries or restoring previous cuts, closing its doors, or reducing the ranks of its lawyers or staff, whether through open layoffs, stealth layoffs, or voluntary buyouts, please don’t hesitate to let us know. Our vast network of tipsters is part of what makes Above the Law thrive. You can email us or text us (646-820-8477).

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headshotKathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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