Photo: Diego M. Radzinschi/ALM

Dentons has joined the growing list of firms reducing compensation to shore up finances amid the ongoing COVID-19 crisis, with partner draws in the U.S. being cut by a minimum of 20% and staff and attorney salaries being trimmed by a maximum of 20%.

As part of a wider package of measures, the U.S. arm of the global firm also has announced 90-day furloughs for a small fraction of its business services staff. It's also abbreviating its summer associates program and moving it online, while also delaying the start date of incoming associates to January 2021.

Dentons U.S. CEO Mike McNamara said in an interview Friday that while the firm's extensive worldwide operations gave him and colleagues a head start in preparing for the impact of the pandemic, continued global uncertainty made it necessary to take steps to ensure future resiliency.

"As the pandemic moved around the world, we were well-positioned because of our preparations and the global task force we'd created. As difficult as this is for many of our clients, we did have an early lens," he said. "We were able to adapt and refine our business continuity planning and resilience preparations with the benefit of that view."

The planned compensation reductions, which will go into effect on May 1, will apply to all partners, attorneys and staff earning at least $60,000. Partners will bear the brunt of the impact, with cuts starting at 20% and extending "much higher" for the firm's highest compensated partners.

For employees, including associates and counsel, as well as other timekeepers and business services staff, cuts will be progressive, starting at 0% for those earning under $60,000 and hitting 20% for those earning over $190,000. Individual high performers, whether lawyers, professionals or business services staff, will be eligible to recover some or all of these cuts as bonuses depending on the firm's 2020 performance.

"It was really important that partners lead," McNamara said. "We felt that a progressive model was important for our culture, important for our values. And we wanted to make sure we have the ability to reward our contributors. If the world gets better faster than expected, we have the ability to ratchet things back."

A total of 41 business services staff, many of who are unable to perform their jobs remotely, will be furloughed starting May 1 for 90 days. The firm says it will pay all health care premiums, including the employee portion, for this interval.

McNamara added that the measures are necessary even with the firm entering the crisis after a strong 2019 and a first quarter of 2020 that saw productivity and fee collections surpass any previous year. Even March was exceptional, he added, with a decline in transactions and court work more than offset by a spike in helping clients with coronavirus exigencies.

"You want to give yourself every flexibility to navigate this period," he said.

Dentons is also establishing a grant program to offer short-term financial assistance to staff and families with hardships resulting directly from the COVID-19 crisis. The firm will make an initial $250,000 payment to the Dentons US Help At Hand Fund, and a small committee will award grants on an anonymous basis.

In addition to shifting the summer program online and abbreviating its length, all second-year summer associates will be awarded a stipend for the summer and will receive a full-time offer to start in fall 2021. First-year summer associates will be invited to return for the 2021 summer program. The new summer program will begin in June. Meanwhile, incoming first-year associates will be invited to start in January 2021, with the option to begin earlier depending on client demand.

Additionally, annual performance reviews for business services staff and paralegals, which were halted last month as the firm went remote, will resume in the next 30 days. Compensation increases will be retroactive to January 2020, and staff and paralegals who receive bonuses for 2019 performance will receive half in the second quarter and the balance paid later in the year.

Just a month and a half before shifting into remote mode because of the crisis, Dentons finalized its combinations with Indianapolis-based Bingham Greenebaum Doll and Pittsburgh-based Cohen & Grigsby, the first phase of the firm's ambitious "Golden Spike" strategy to grow across the U.S.

"We continue to have conversations with really strong firms across the U.S., and we'll continue to execute on our strategy without interruption," McNamara said.

He added that the newly integrated firms as well as the prospects for the next round of combinations are benefiting from the conversations he and other leaders are having with industry counterparts. McNamara regularly communicates with other U.S. firm leaders at an ongoing forum led by the Zeughauser Group, while the firm's general counsel does the same with other GCs, and the firm's global security chief does so with his counterparts.

"We've done the same with firms who are part of phase two conversations for Golden Spike," he said.

In Europe and the Middle East, the firm has cut partner compensation by 15-20%, depending on seniority, for the next six months. Its business support team heads in the region have also had their monthly drawings reduced by up to 20%.

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