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Wake Up Call: Big Law Firm Slashes Partner Draws 90% in Survival Move

April 9, 2020, 12:18 PM

In today’s column, Hogan Lovells incoming CEO announced a shakeup of the firm’s group structure and leadership; Big Law pro bono practices are seeing a boom in the Covid-19 crisis; McDermott Will & Emery added four restructuring partners, as firms get ready for a wave of coronavirus bankruptcies; Reed Smith said it’s expanding its “new law” partnership with ALSP Elevate; and a Harvard Law student whipped out a gun during a recent online class via Zoom.

  • Leading off, dozens of law firms have announced cost-cutting and other measures to preserve their finances during the Covid-19 crisis. Among the latest, Kansas City-based Shook Hardy & Bacon’s measures include salary cuts for lawyers and staff, some furloughs, and a 90% cut to a partner profit draw scheduled for this week, then 75% for the rest of the year. Yesterday, transatlantic firm Bryan Cave Leighton Paisner said it’s deferring payments to partners and will cut salaries for staff and associates by 15%. (BLAW) And Indianapolis-based Ice Miller announced salary cuts and some furloughs. (AbovetheLaw.com)

  • Meanwhile, Orrick announced measures that include pay cuts for U.S. attorneys and for staff across the firm. It’s also cutting some staff hours, but said it’s not planning to furlough or lay off employees. (American Lawyer) U.K. firm Linklaters suspended its fourth-quarter partner profit distributions, which had been scheduled to go out in June. (The Lawyer) Another U.K. firm, Bird & Bird, said it’s considering using part of partners’ upcoming quarterly profits to feed a Covid-19 reserve fund. (TheLawyer.com)

  • Firms have also been delaying and/or otherwise adjusting their summer associate programs in response to the crisis. In recent examples, Goodwin Procter said it’s changing its summer associate program to a five-week, virtual experience. (BLAW) Orrick yesterday appeared to be the first firm to push back its program’s start time to January, or after postponed bar exams. (BLAW)

  • With bar exam schedules up in the air because of the crisis, the American Bar Association Board of Governors approved a resolution that calls for allowing recent law graduates who are unable to take a bar exam to practice law, with limitations. (BLAW) Law school deans at UCLA and Berkeley also called for offering provisional bar licenses during the pandemic. (The Recorder)

  • The Covid-19 crisis has hit some Big Law practice areas especially hard, but one area that is booming is pro bono, for which counsel say they are seeing a surge in requests for legal help from doctors, scientists, inmates, immigrants and others, as well as from attorneys at their firms who want to offer free legal services. (American Lawyer)

  • Plaintiffs and defense lawyers are collaborating in an effort to provide meals to health care workers. (Daily Report Online) Madrid-based technology-focused law firm ECIJA helped develop a free tool, SOS Covid-19, that lets local governments, hospitals, and other care institutions hook up with private businesses and individuals who can aid in the Covid-19 fight. (Law.com International)

  • The ABA Young Lawyers Division has created a national hotline to connect people needing legal services with lawyers during the pandemic. (ABAJournal.com)

  • Blank Rome launched a tool for tracking states’ policy and other responses to Covid-19. (BlankRome.com)

Lawyers, Law Firms

  • Hogan Lovells’ incoming global chief executive, Miguel Zaldivar, set to take over July 1, announced a major restructuring of the firm’s groups and leadership in order to make decision making faster and more efficient. (GlobalLegalPost.com)

  • ViacomCBS Inc., the media conglomerate created out of the recent reunion of CBS Corp. and Viacom Inc., paid a handful of lawyers nearly $20 million in total compensation during 2019. (BLAW)

  • The U.K. Solicitors Disciplinary Tribunal decided yesterday that a disciplinary hearing in the sexual misconduct case against Baker McKenzie and its former London managing partner Gary Senior will be held remotely via Zoom on April 27. (The Lawyer)

  • Lawyers and accountants in New Orleans say they are “flooded” with work linked to the federal pandemic stimulus package. (Nola.com)

  • The so-called Magic Circle firms, Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters and Slaughter and May, aren’t really so magic any more, according to this English commentator. (American Lawyer)

  • Deal update: Covington Burling advised drugmaker GlaxoSmithKline Plc on its $250 million partnership deal with San Francisco biotech company Vir Biotechology Inc., advised by Cooley, to research vaccines and treatments for Covid-19 and other coronaviruses. (Bloomberg News)

  • Haynes and Boone released new reports on monitoring bankruptcies in the oil patch and oilfield services sector, and other energy sector reports. (HaynesBoone.com)

Laterals, Moves

  • Expecting a wave of coronavirus insolvencies, McDermott Will & Emery added four corporate and restructuring partners across the country. Craig Rusile arrives from DLA Piper, where he was Miami managing partner. According to his Linkedin, he was earlier co-chair of Hunton Williams’ bankruptcy and restructuring department. Focused on the energy and infrastructure sector, Chris Gladbach, in Washington, arrived from Orrick; Peter Healy, who advises issuers and underwriters, arrives in San Francisco from O’Melveny & Myers. Former DLA Piper counsel Maris Kandestin arrived as a partner in Wilmington, Delaware. (MWE.com)

  • O’Melveny recruited corporate/private equity partner Todd Boes from Ropes & Gray in San Francisco. (OMM.com)

  • Carlton Fields added litigator Amy M. Bowers as an associate in its Miami office, which has added a baker’s dozen lawyers in the past year. (CarltonFields.com)

In-house

  • In-house tech and M&A veteran Stephen Chen, who’s been at Yahoo!, VMWare, Inc., among other companies, got hired as the first top lawyer at Duolingo Inc., a Pittsburgh-based language-learning platform that has over 1 million paid subscribers. (Corporate Counsel)

  • Former OptumHealth general counsel Rich Sharff returned to Bradley Arant Boult Cummings as counsel in Birmingham in the firm’s healthcare practice group. He arrives from Surgical Care Affiliates, where he was top lawyer, before which he spent 1994 to 2007 at a precursor firm of Bradley Arant. (BizJournals.com)

  • The Tennessee Valley Authority federal power generating company hired energy industry in-house veteran David Fountain as senior vice president and vice general counsel, effective June 1. A McGuireWoods associate earlier in his career, Fountain’s currently SVP, legal, chief ethics and compliance officer and corporate secretary at Duke Energy Corporation, in North Carolina. (Chattanoogan.com)

Technology

  • Reed Smith said that in response to Covid-19 crisis, the firm is expanding its year-old partnership with alternative legal services provider Elevate. The firm also said its legal tech subsidiary, Gravity Stack, has tweaked its AI-powered contract management tool so it can search for force majeure and other clauses that have new relevance during the crisis. (ReedSmith.com)

  • Amidst the crisis, law firms and legal departments are becoming more open to using tech and alternative legal services providers, this article says. (Legaltech News)

Legal Education

  • A Harvard Law student brandished a gun during an online class on Zoom. (AbovetheLaw.com)

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

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