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Davis Wright Acts on Crisis With Pay Cuts, Staff Furloughs

April 28, 2020, 7:26 PM

Davis Wright Tremaine is the latest firm to implement salary cuts, staff furloughs, and reductions in equity partner distributions as the legal industry struggles to cope with the economic impact of the coronavirus pandemic.

“We’ve delayed actions that affect jobs and paychecks for as long as we could,” Davis Wright Tremaine managing partner Jeff Gray said in a statement. “But, like many of our peers, we now must take additional steps to protect the firm, while continuing to provide the highest level of client service and ensure we emerge in the strongest possible position.”

His statement said that although the firm had a “record” 2019 and a strong first quarter of 2020, in some areas, there’s been decreased demand and the firm has seen “a significant slowdown in collections.”

According to the firm, starting May 2 and continuing until the end of 2020, the lawyers and staff will see reduced salaries. Contract partners and C-level executives will see cuts of 15%, while associates, counsel and of counsel will see 12% salary cuts.

The firm is reducing its quarterly equity partner distributions, with the expectation that equity partner compensation will be at least 25% below budget in 2020. Based on salary level, Davis Wright’s staff will see cuts ranging from 6% to 10%, with no reduction for those making below $60,000.

Also beginning May 2, the firm said it will temporarily furlough approximately 8% of its staff to adjust for “disrupted or diminished” work due to reduced demand. There will also be reduced work schedules for some staff. No attorney furloughs are planned, the firm said.

Davis Wright said it will continue to provide those furloughed with medical benefits as well as access to an “Employee Disaster Relief Program,” a partner funded program to help staff financially affected by the pandemic. It’s also started a “Vacation Donation Bank” at the firm.

In addition to salary cuts and staff furloughs, Davis Wright also said it is moving to a shortened, six-week virtual summer associate program. Many other firms have already taken such steps to avoid in-person contact during their associate programs, which serve as tryouts for law students hoping for future firm jobs.

“We must make sacrifices together, but we will also share in our success,” Gray said. “If we end the year better than we currently expect, which we are working very hard to do, we will share that financial success across all levels of the firm.”

Other recent examples of law firm cuts and salary reductions have included Baker Botts which announced on Monday that it would temporarily reduce salaries for its lawyer and staff starting May 1 as well as delay the start date for its incoming fall class of associates.

To contact the reporter on this story: Meghan Tribe in New York at mtribe@bloomberglaw.com

To contact the editors responsible for this story: Rebekah Mintzer at rmintzer@bloomberglaw.com; Tom P. Taylor at ttaylor@bloomberglaw.com

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