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Sheppard Mullin Eliminates Covid Cuts, But Lays Off Staff

Oct. 6, 2020, 11:01 PM

Sheppard, Mullin, Richter & Hampton will get rid of attorney and staff pay cuts made in response to the coronavirus crisis but will also eliminate half of furloughed staff positions.

In August the firm said it would halve the 5% to 10% pay reductions it implemented back in May for staff in response to the crisis. The firm had also said it would reduce the spring’s associate, staff attorney and special counsel pay cuts from 12% to 6%.

But an email to the firm on Tuesday by Sheppard Mullin chairman Guy Halgren said the firm will eliminate pandemic pay cuts altogether. The firm will also make whole those who received a percentage compensation adjustment in their Oct. 16 paychecks.

However, as has been the case at other Big Law firms, some previously furloughed staff at Sheppard Mullin will lose their jobs.

Halgren said that “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.”

Those positions will be eliminated as a reduction-in-force and given severance packages and medical insurance paid through the end of the year, he said.

Those remaining 22 staff will be offered the opportunity to opt into the same severance package, which will provide 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,” Halgren said.

Many law firms have been walking back or eliminating compensation reductions for attorneys and staff in recent weeks. The cuts, which initially reached nearly half of the AmLaw 100, were implemented as firms feared the economic effects of the coronavirus pandemic.

Despite initial projections earlier this year that the coronavirus crisis would severely impact law firm profitability and revenue, many firms have only seen slight dips over the last few months. Some, like Davis Polk & Wardwell and Debevoise & Plimpton, have handed out large pandemic-related bonuses to associates.

Perkins Coie announced last week that it would eliminate salary cuts for lawyers and staff. K&L Gates and Orrick Herrington & Sutcliffe announced they would be eliminating salary cuts for attorneys and staff and restoring salaries to pre-pandemic levels.

But as firms roll back their salary cuts, law firm staff members have faced layoffs. Last month, Davis Wright Tremaine said it would lay off 39 staff members. Baker McKenzie, Cleary Gottlieb Steen & Hamilton, Skadden Arps Slate Meagher & Flom, Nixon Peabody, Seyfarth Shaw, Venable, and Winston & Strawn have also announced layoffs.

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