Reed Smith Will 'Slow' Partner Pay in Response to COVID-19 Pressures
The firm said it is holding back pay for both equity and nonequity partners as part of "a cautious approach" to protect its finances.
March 30, 2020 at 01:58 PM
2 minute read
Credit: J. Albert Diaz/ALM
Reed Smith is reducing partner distributions in response to the disruption and economic effects of the new coronavirus.
A Reed Smith representative said in a statement Monday: "Businesses around the world are bracing for the short-term and potential long-term economic impacts of COVID-19, and we are taking a fiscally conservative yet responsible approach. Our leadership is taking a cautious approach and has made the decision to slow partner cash distributions in the near term as a precaution. We think this is a prudent choice as we look ahead to uncertainty in global events."
The statement added that the firm's performance so far in 2020 is on target, and many practices "are exceptionally busy."
Reed Smith had about 660 partners across its worldwide offices last year, according to ALM data, including about 280 equity partners and about 380 nonequity partners.
According to a report in the U.K. publication The Lawyer, firm management told partners last week that it will reduce monthly draws by 40% for the next five months for equity partners, and 15% for the next three months for nonequity partners globally.
Longtime law firm consultant Hugh Simons wrote for The American Lawyer last week that in preparing for continued economic uncertainty, "[t]he biggest available lever firms have is to defer payments to partners."
Simons explained: "For Big Law, typical profit margin is around 50% (i.e., partner income as a percent of revenue); hence, each month of deferred partner comp covers a full month of expenses. The only thing that comes close in size is delaying the funding of pensions, but that's often not viable."
At least one large firm has already acknowledged taking steps to reduce retirement-related costs. Philadelphia-based insurance defense firm Marshall Dennehey Warner Coleman & Goggin confirmed Monday that it plans to suspend its contributions to employees 401(k) accounts for the rest of the year, effective May 1.
Read More
'Survival Mode' Is Now for Some Law Firms, While Others Plan and Wait
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View All
From ‘Deep Sadness’ to Little Concern, Gaetz’s Nomination Draws Sharp Reaction From Lawyers
7 minute read
Dechert 'Spark Tank' Competition Encourages Firmwide Innovation Focus
Akerman Opens Charlotte Office With Focus on Renewable Energy, Data Center Practices
4 minute read
Law Firms Mentioned
Trending Stories
- 1Read the Document: 'Google Must Divest Chrome', DOJ Says, Proposing Remedies in Search Monopoly Case
- 2Voir Dire Voyeur: I Find Out What Kind of Juror I’d Be
- 3When It Comes to Local Law 97 Compliance, You’ve Gotta Have (Good) Faith
- 4Legal Speak at General Counsel Conference East 2024: Virginia Griffith, Director of Business Development at OutsideGC
- 5Legal Speak at General Counsel Conference East 2024: Bill Tanenbaum, Partner & Chair, AI & Data Law Practice Group at Moses Singer
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250
