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For ultra-high-grossing law firms, an extra-thick cushion of cash made it easier to resist the initial wave of pay reductions, furloughs and layoffs that swept through the legal industry, slimming down paychecks and claiming at least 64,000 jobs last month.

Now the holdouts are thinning even in the Am Law 100′s most rarefied air.

On Monday Quinn Emanuel Urquhart & Sullivan became the latest Am Law 25 firm to make adjustments to lawyer compensation during the COVID-19 crisis, more than a month after such moves began spreading widely among relatively smaller firms.

In Quinn's case, the firm, which is ranked 25th by revenue, but is 5th in the Am Law 100 by both profits per equity partner and profits per lawyer, is pausing partner draws and readjusting distributions at least until midsummer, "building up our cash reserves," as founder John Quinn put it. Quinn said the firm's finances were solid.

Others among the nation's largest, richest firms are beginning to take more extreme measures, with lower-ranking lawyers and professionals sharing the pain.

Still, most top 25 firms—those with about $1.25 billion in revenue and up last year—are opting for pay reductions for both lawyers and high-earning staff if they have resorted to cuts, with few layoffs so far.

Jim Cotterman, an analyst who studies law firm compensation issues at Altman Weil, said in an email that cutting pay across the board was effective because it's overwhelmingly the largest line item in a law firm budget and can immediately reduce expenditures.

"Firms already curtailed nonessential expenditures—a meaningful, but small portion of the budget—and increased access to liquidity—larger lines of credit and relaxed terms—and deferred distributions to partners," he said. "If a downturn is going to be deep enough and long enough, pay reductions and furloughs are where you end up. And if you want to protect your people, furloughs are the very last item on your list, to be used only as a last resort."

Cotterman added that even though many firms had a strong year in 2019 and entered the downturn in a good financial position, reporting strong numbers even through March and April, most would have to adjust their expenditures to stay afloat in the coming months.

"Surviving this is a matter of reducing cash burn to a level that maintains sufficient operational capacity long enough to navigate through to the other side," he said. "Each firm must look at where it is, the short- to intermediate-term demand for its services and evolving client payment patterns. It is not just one look and done, but ongoing reviews that look out six to nine months. Firms will reach decision points at different times based on their operational characteristics."

Baker McKenzie, which ranked fourth in the latest Am Law 100 and brought in more than $2.9 billion in revenue, said April 13 it was reducing salaries by 15% for all attorneys, timekeepers and business professionals in the U.S. who make more than $100,000.

Hogan Lovells, ranked No. 8 on the Am Law 100 with $2.25 billion in revenue last year, initially said it would spread out partner distributions and bonuses that are usually paid in full at the beginning of May. The firm changed course this week, announcing it would cut attorney compensation, with equity partner draws decreasing 15% to 25%, nonequity compensation decrease by 15%, and nonpartner salary by 10%.

Some firms are looking to voluntary cutbacks from employees to help cut costs. Norton Rose Fulbright, ranked 12th on the 2020 Am Law 100 list with $1.9 billion in gross revenue, asked its staff in Europe, Middle East and Asia to sign up for a 20% reduction in hours and pay for the rest of the year. The firm is also deferring partner distribution payment, staff salary increases and bonuses for lawyers and staff.

At Mayer Brown, which ranked No. 17 on the Am Law 100 with $1.48 billion in gross revenue, partners agreed in March to a 20% monthly draw reduction and a distribution suspension for the first half of 2020. This week, it said it would also reduce salaries for nonequity lawyers and staff making more than $200,000.

Goodwin Procter, ranked No. 22 on the Am Law 100 with $1.3 billion in gross revenue last year, resisted austerity measures affecting lawyers and instead laid off a "limited number" of its professional staff, making it the only top 25 firm to publicly acknowledge layoffs. The firm said it will pay for health insurance for affected former employees through September and provided severance.

An earlier version of this report misstated the duration of extended health benefits for Goodwin Procter staff members who were laid off. It has been corrected. 

Read More

Pay Cuts, Layoffs, and More: How Law Firms Are Managing the Pandemic

Guarding Cash, Quinn Emanuel Hits Pause on Partner Distributions and Rejiggers Draws

Legal Industry Shed 64,000 Jobs in April as Layoffs and Furloughs Spread

Baker McKenzie To Trim Attorney, Professional Salaries by 15% in US

Hogan Lovells Cuts Attorney Comp After Delaying Partner Distributions

The 2020 Am Law 100: Ranked by Gross Revenue