Baker McKenzie will cut the salaries of U.S. lawyers and high-paid staff by 15% starting on May 1, the firm said in a statement, warning that while the length of the pay cuts are unknown they could last through the end of the year.
The firm said the pay reductions would help avoid layoffs, which some law firms have announced in recent days as the global economy idles to prevent further spread of Covid-19.
The largest pay cuts will be felt by equity partners, and they will not impact employees earning less than $100,000 a year, Baker McKenzie’s statement said.
The firm’s bonus pool for business professionals will be “adjusted,” but the firm did not provide specifics other than saying the adjustments would “achieve consistent total savings and economic impact.”
Baker McKenzie is one of the world’s largest law firms with 77 offices across more than 45 countries and more than 12,000 employees. It pulled in $2.92 billion in revenue in fiscal 2019.
The firm said its financial strength, practice mix, and global client roster “position us well” for the Covid-19-related economic downturn.
“We all will share in some short-term pain, but in the long term, taking these actions now is the most prudent way for us to move through this crisis as a firm, with the smallest impact possible on our people and our clients,” said Colin Murray, the firm’s North America CEO.
In Canada, base salary cuts will be 10%. The firm’s lawyers and staff in Mexico will not see base salary reductions, the firm said, “due to local policies and regulations.”
The firm said it anticipates awarding payments later this year to top performers for “demonstrating exemplary performance in the face of increasing demands on their time.”
It’s also establishing an emergency loan fund to address extreme hardships staff may face during the crisis.