Hogan Lovells office. (Photo: Diego M. Radzinschi/ALM)

Hogan Lovells is cutting compensation for all U.S. attorneys earning over $100,000 annually, citing uncertainties in the pandemic environment and a slowdown on global economic activity.

The firm's latest announcement comes three weeks after the firm said it would spread partner distributions and bonuses initially scheduled for May over the coming months.

CEO Stephen Immelt said in a statement Wednesday that the compensation reductions, which hit equity partners most sharply, were necessary to protect the business amid a grim global economic outlook, even though the firm's overall position is solid.

"We continue to see an uptick of work in the technology and life sciences sectors, our restructuring practice is very active, and we have successfully advised on headline-grabbing M&A deals. However, we are facing an uncertain environment and economic activity globally continues to drag," Immelt said. "Complacency is not an option for us. We are therefore continuing with our policy of cutting back all non-essential costs and making measured adjustments to compensation."

The cuts, which go into effect on June 1, include reductions to equity partners' monthly draws by 15% to 25%. Equity partners will also defer half of any profits from the first quarter, ordinarily paid in August, to December.

Nonequity partners will see base compensation reduced by 15%, which would amount to an annual salary cut of 8.75% if the change stays in effect for the entire year.

Most nonpartner attorneys at the firm, including all associates, will receive a 10% salary cut, akin to 6% over the full year, while the most highly compensated counsel and specialists will face 15% cuts, as will all senior counsel. Attorneys currently earning less than $100,000 will be unaffected.

Decisions on U.S. attorney bonuses will be made in the normal course at the end of the year.

The firm's earlier financial response to the COVID-19 crisis involved spreading partner compensation payments based on 2019 performance equally over each month depending on the amount owed to each partner, rather than distributing them on May 1. The firm also deferred salary reviews and discretionary bonuses for lawyers in the U.K. and Asia Pacific regions, which were due to take place on May 1, along with reviews and bonuses for the significant majority of business service teams worldwide, which were also scheduled for the same date.

Associates in the Americas, Continental Europe and Africa have their reviews at the end of the year, so they are not currently directly affected by the delay in salary and bonus reviews.

But U.S. business service team members had salary reviews and bonus payments scheduled for the start of May, just as colleagues throughout the world, and the "significant majority" of these are also to be postponed and reassessed later in the year.

The measures come after a period of financial growth. Hogan Lovells grew total global revenue by 6% in 2019 while raising profits per equity partner by 9% to $1.51 million.