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Corporate Legal Departments Trim Salaries Amid Pandemic

Oct. 8, 2020, 10:13 PM

Early indications are that companies are cutting legal department salaries and not offering more compensation for additional hours worked as they adjust to the demands of Covid-19, a new study shows.

The 2020 Law Department Compensation Policies & Practices Report found some companies also froze salaries or expected additional work for the same pay, and few rewarded employees with spot bonuses for extra work required by the pandemic.

The survey by the Association of Corporate Counsel with consulting firm Empsight International was conducted in June and July with more than 600 organizations responding generally, but not to every question.

Few employers reported layoffs at the time the survey was taken although more law firms since summer have turned temporary furloughs into full-time layoffs.

Between 16% and 18% of organizations responding to the survey said they froze hiring across law department employee units as a result of the pandemic.

Areas of legal specialty most impacted by the pandemic were compliance, contracts, environmental health and safety and regulatory matters.

Companies said they added more internal staffing for contracts, but used additional outside counsel in the other areas. However nearly 9% of those responding said they had decreased use of outside counsel for general legal matters.

Other highlights of the report:

  • More than 80% of the employers responding carried out widespread work from home, and about 15% plan to maintain full-time work from home post-Covid. Nearly 30% plan to maintain part-time remote working.
  • About a third of the 123 companies responding said it was too early to determine Covid’s impact on salaries. An estimated 18% said there would be “no impact” and about 14% said they anticipated merit increases would be eliminated next year.
  • Less than 5% of companies projected better business conditions next year with higher increases in salaries.

More than 20% of companies responding were in the tech industry, followed by financial services, real estate and consumer products, reflecting the association’s membership composition. It also will release a report detailing compensation benchmark data.

To contact the reporter on this story: Elizabeth Olson in Washington at egolson1@gmail.com

To contact the editors responsible for this story: Rebekah Mintzer at rmintzer@bloomberglaw.com; Chris Opfer at copfer@bloomberglaw.com

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