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 spokesperson 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 person at the 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, "The 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 401K 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
© 2025 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
Squire Patton Boggs Hires 7-Lawyer Team to Beef Up ESG Practice in Brussels
2 minute read
Kirkland’s O’Shea Acts Alongside Former Outfit Simpson Thacher on KKR Deal
2 minute read
King & Spalding and Ex-Partner Accused of Fraud After Client Claims £1.7 Million Deposit Loss
2 minute readLaw Firms Mentioned
Trending Stories
- 1NJ Supreme Court Clarifies Affidavit of Merit Requirement for Doctor With Dual Specialties
- 2Whether to Choose State or Federal Court in a Case Involving a Franchise?
- 3Am Law 200 Firms Announce Wave of D.C. Hires in White-Collar, Antitrust, Litigation Practices
- 4K&L Gates Files String of Suits Against Electronics Manufacturer's Competitors, Brightness Misrepresentations
- 5'Better of the Split': District Judge Weighs Circuit Divide in Considering Who Pays Decades-Old Medical Bill
Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
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
