Davis Wright Tremaine Walks Back Pay Cuts, Lays Off Some Staff

Davis Wright Tremaine is walking back some of the austerity measures it took earlier this year, but also making some staff furloughs permanent layoffs as law firms face the new normal brought about by the coronavirus pandemic.

Davis Wright will restore 50% of the salary reductions it implemented back in May, effective Tuesday, according to an emailed statement provided to Bloomberg Law from managing partner Jeff Gray.

“Due to our focus on serving clients, developing new work, and managing billing and collections, we expect to finish the year better than we had previously modeled,” Gray said.

The firm will bring back a number of the 8% of staff furloughed earlier this year, Gray said. But it has also “made the difficult decision” to lay off some of those furloughed staff, “not knowing when, if ever, their previous work will return.”

“This is the result of a fundamental shift in how we expect to operate and support our clients and lawyers going forward and not a cost-cutting measure,” Gray said. Those laid off are receiving increased severance payments, additional outplacement and coaching support and coverage on medical premiums through the end of the year, the statement said.

More Roll Backs

Davis Wright is one of several Big Law firms to walk back pay cuts implemented amid concerns about the economic impact of the coronavirus pandemic, though attorney and staff layoffs remain relatively rare.

Loeb & Loeb announced last week that it would partially reverse salary cuts for its attorneys and paralegals. Other firms to roll back austerity measures include Crowell & Moring, Cadwalader, Wickersham & Taft, Holland & Knight, Katten Muchin Rosenman, Fox Rothschild, K&L Gates, Baker Botts, Reed Smith, and Sheppard, Mullin, Richter, and Hampton.

Davis Wright’s spring reductions affected contract partners and C-level executives, who saw 15% pay cuts, while associates, counsel and of counsel received 12% reductions in salary. The firm’s staff also saw cuts ranging from 6% to 10%, based on salary level, with no reduction for those making less than $60,000.

The firm also reduced its quarterly equity partner distributions, with the expectation that partner compensation would be at least 25% below budget in 2020.

Gray said in the Tuesday statement the firm will increase third quarter distributions for its equity partners and is “optimistic” it will be able to do the same for the fourth quarter.