Eversheds Sutherland. (Courtesy photo)

Eversheds Sutherland's U.S. branch is cutting compensation for lawyers and staff and making furloughs as the firm braces for continued economic disruption from the coronavirus pandemic.

The firm announced to its personnel on Wednesday that it is reducing compensation for U.S. lawyers and staff by 10% on average and furloughing about 40 staff members. 

Meanwhile, Eversheds Sutherland is deferring the start date for its first-year associate class from the fall to January 2021. The firm will host a shortened, remote summer associate program for its roughly 20 U.S. law students, starting in July, and it plans to make job offers to all of them for fall 2021. 

The firm's U.S. co-chair, Mark Wasserman, said in an interview that the expense cuts are preemptive measures, given the uncertainty over the duration and economic effect of the pandemic. 

"We had a good 2019, a good first quarter and a good April in terms of work, but as we look at the economic news and listen to our clients, we are planning for future reductions in work. I think this is an appropriate, prudent preparation for the future, given everything we're seeing," said Wasserman, who forecast a slow economic recovery. 

Wasserman said several of the firm's practices are very busy, including regulatory, tax, intellectual property, employment and insurance, but transactional and litigation work have slowed down.

"We're preparing for what we think will be less work for the short term. We don't want to be caught off guard," he explained. "We can always dial [these measures] back if there is a faster recovery." 

Equity partners "will be leading the way" in compensation reductions, Wasserman said, because if revenue declines, so will their distributions. (The firm compensates its equity partners through profit distributions alone and does not pay them draws.) 

For all other attorneys and staff, Eversheds Sutherland is reducing pay, on average, by 10% of total 2020 compensation, which includes salaries and any bonuses. Personnel making $50,000 or less will not have their compensation reduced.

The firm plans to furlough the 40 staff members for three months, depending on conditions. It will fully cover their health insurance during that time, paying 100% of their insurance premiums.

Wasserman said about one-third of the staff being furloughed have jobs that can't be done remotely, such as catering, facilities management and reception. The others are across departments, including events and marketing. 

Eversheds Sutherland established a U.S. employee relief fund in 2018, which is available to help employees, including those furloughed, with unforeseen hardships.