Reed Smith is engaging in a second round of cash-saving measures that include pay cuts, furloughs, and layoffs, citing “prolonged economic uncertainty” from the coronavirus pandemic.
The firm said in late March it was slowing cash distributions to partners in what it described at the time as a “cautious approach.”
Those earlier changes, which the firm has not detailed, will be extended to the end of the year, Reed Smith managing partner Sandy Thomas, said in a statement.
He said the firm’s owners will bear “the largest share” of the financial pain.
Beyond partner draws, pay cuts for lawyers will also be implemented on an annualized basis, ranging from a 14% reduction for non-equity partners, 12.5% for counsel, and 12% for associates. The cuts will impact lawyers across the U.S., Europe, and the Middle East. Similar measures were already taken in Asia, Thomas said.
His statement said most of the firm’s professional assistants and “select professional staff” will move to a four-day work week and will see compensation reductions, and that a “small number” of employees will be temporarily furloughed.
Professional staff who earn more than $100,000 annually will have their salary reduced nearly 6% on an annualized basis, Thomas said.
And in London, the firm’s largest office, the firm is starting a “targeted redundancy process” that will impact “a small number” of lawyers and staff.
“Like all well-run businesses, during the normal course of managing the firm we continually evaluate the size and shape of our global organization to ensure that it matches the needs of our clients,” Thomas said. “This practice is as important as ever during the pandemic.”
The firm said it would not elaborate on the new measures beyond Thomas’ latest statement.
Many law firms have implemented austerity measures to preserve cash, anticipating a recession will eat into collections through the year. As the recovery from the pandemic has grown more uncertain, some firms have had to take further measures to protect their cash position.
Reed Smith had 280 equity partners in 2019 and, on average, they made slightly more than $1.3 million, according to the most recent AmLaw data. The Philadelphia-founded firm is among the largest in the world, with nearly $1.25 billion in 2019 revenue and more than 1,600 lawyers, according to AmLaw.