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Wake Up Call: BakerHostetler Cuts Pay for Covid ‘Preemptive Savings’

May 8, 2020, 12:24 PM

In today’s column, three Big Law firms advised as Neiman Marcus filed for bankruptcy, the latest in what looks to be an approaching wave of Covid-19 insolvencies; Cooley advised videoconferencing app Zoom on a key acquisition to improve its data security; Zoom also hired a veteran lawyer to guide its policy; #MeToo boutique Wigdor Law said it’s representing Tara Reade in her sexual assault allegations against former Vice President Joe Biden. An appeals court affirmed most of the $112 million in fees awarded to lawyers for NFL players in their concussion class action against the league.

  • Leading off, BakerHostetler told lawyers and staff the firm has to implement “preemptive savings” measures to avoid a cash crunch in the economic aftershocks of the Covid-19 pandemic. The Ohio-based firm, with over 900 lawyers, said it’s reducing partner draws, and it’s making across-the-board pay cuts for attorneys and staff earning over $80,000, or 70,000 in some markets, but it’s not making layoffs. The pay cuts range 10% to 15% on a yearly basis, higher if calculated over the remaining months of 2020. (Above the Law)

  • Texas headquartered Locke Lord made 10% pay cuts for associates as of May 1, as well as an unspecified number of furloughs, according to a report. (Above the Law)

  • Those firms were among at least eight firms that this week made austerity cuts to protect their liquidity. That’s down from about a dozen firms the previous week, but they included some big names—Hogan Lovells; Mayer Brown; and Pillsbury, among others. (BLAW)

  • The cuts this week came as new data showed the U.S. economy tanking, overall U.S. jobless hitting a record 33.5 million, and a growing “wave” of bankruptcies that so far has included J. Crew and Neiman Marcus. (BLAW) Not everybody’s lamenting the bankruptcies, though. Kirkland & Ellis; Wachtell; and Paul Weiss advised on Neiman Marcus’ filing, a report says. (American Lawyer)

  • At Kirkland, the world’s biggest law firm by revenue, a top partner is reported to have warned restructuring associates who are not meeting billable hour targets that “this isn’t a gravy train where you can just chill and be along for the ride.” (American Lawyer) In the U.K., one view is that Big Law firms may have to start “removing partners who are not paying their way.” (Law.com International)

  • Shearman & Sterling is accused in a New York federal age-bias lawsuit of using Covid-related layoffs as an excuse to get rid of a 62-year-old global manager of facilities and audiovisual infrastructure. (BLAW)

  • Zoom Video Communications Inc. has seen its videoconferencing app explode in popularity during the Covid-19 lock-downs, and it’s in use by lawyers, judges, and other legal pros. But security and privacy complaints about the app have spurred government probes and lawsuits. Yesterday, the San Jose, California-based company agreed with New York’s attorney general to improve its security and encryption protocols. (Bloomberg News via BLAW)

  • To address a major weakness, Zoom, advised by Cooley, acquired Keybase, a secure messaging and file-sharing service, to build its end-to-end encryption. (Forbes)

  • Zoom also hired a new global public policy and government relations chief, recruiting a former U.S. trade official, Jonathan “Josh” Kallmer, from the Information Technology Industry Council, where he was executive vice president of policy. Kallmer was a Crowell & Moring counsel earlier in his career. (Corporate Counsel)

Lawyers, Law Firms

  • When Kirkland this week poached rising star dealmaker Edward Lee away from Wachtell this week it sent a clear signal that the Chicago-founded firm poses a threat to even the most venerable Wall Street firms. (BLAW)

  • Use of videoconferencing is just one of the accelerated changes law firms have undergone because of pandemic shutdown. Here’s a look at what firms’ “new normal” might look like after Covid-19. (BLAW)

  • An appeals court upheld most of the $112.5 million fees awarded to attorneys representing pro football players in the concussion class action against the National Football League. (BLAW)

  • #MeToo boutique Wigdor Law tweeted that it’s representing Tara Reade in her sexual assault allegations against former Vice President Joe Biden, Democratic presidential hopeful. (Twitter) The firm’s founding partner Douglas Wigdor, an avowed Trump supporter, had represented six Harvey Weinstein accusers. (Bloomberg News) (New York Magazine)

  • Jones Walker said partner Grady Hurley, leader of its maritime litigation and arbitration team, got elected as second vice president of the Maritime Law Association of the United States. Hurley’s also co-chair of the firm’s energy, environmental & natural resources industry team. (JonesWalker.com)

Pro Bono

  • Morrison & Foerster is advising Survivor Corps, a nonprofit that aims to connect U.S. Covid-19 survivors and infected patients with medical, scientific, and academic research communities in the fight for treatments for the disease. (MoFo.com)

Laterals, Moves

  • California-based Tyson & Mendes added former Lewis Brisbois partner David M. Frishman as a partner on its complex trial team in Los Angeles. (TysonMendes.com)

  • Norton Rose Fulbright’s Dubai office got back banking and finance attorney Nicholas Robinson as a partner. He arrives from U.K. firm Stephenson Harwood, which he joined about a year ago after over eight years at Norton Rose. Earlier in his career he was at Allen & Overy. (NortonRoseFulbright.com)

  • London-based Mishcon de Reya hired two private wealth lawyers from a Singapore branch of Withers Worldwide to open an office in the city. (Legal Business Online)

In-house

  • Menlo Ventures, a prominent Silicon Valley venture capital firm, recruited corporate and securities lawyer Deborah Carrillo, who recently made partner at Pillsbury, as its first general counsel. Branch and Kickstarter are among other financial firms that also recently hired top lawyers (BLAW)

  • Personalis, a California-based cancer genomics company, recruited veteran biotech industry in-house leader Stephen Moore as its first general counsel. He was most recently top lawyer at Pacific Biosciences. (Corporate Secretary)

Technology

  • Law firms have been working remotely for over a month because of the Covid-19 lockdown, but that doesn’t mean they have the cybersecurity and IT policies in place to do that permanently, advisers at Cozen O’connor said. (Legaltech News)

  • Apttus Corp., a Kirkland & Ellis client that makes software for managing work processes, agreed to acquire rival Conga, which is advised by Willkie Farr & Gallagher and has developed document-generation applications for customers including Salesforce.com Inc. (Bloomberg News)

  • Legal tech company LegalMation said it updated its artificial-intelligence powered litigation management platform to handle an expected surge of Covid-19-related cases. (PR Newswire)

Legal Education

  • Illinois’ state bar said law school graduates can do most of the work of first-year associates if properly supervised by a firm attorney even without taking the bar exam. (BLAW)

To contact the correspondent on this story: Rick Mitchell in Paris at rMitchell@correspondent.bloomberglaw.com

To contact the editors responsible for this story: Rebekah Mintzer at rmintzer@bloomberglaw.com; Darren Bowman at dbowman@bloomberglaw.com