Photo: Diego M. Radzinschi/ALMPerkins Coie adopted new austerity measures related to the COVID-19 pandemic Wednesday, cutting salaries for associates and professional staff in addition to delaying payouts for partners.
The firm said in an email that it will enact a 15% salary reduction for non-partner lawyers, a 10% reduction in salary for staff members making between $125,000 and $200,000 per year and a 15% reduction for professionals making over $200,000. Those making less than $125,000 annually will not be affected.
The Seattle-founded firm also said that it would conduct its summer associate program virtually, having the full complement of participants go through an abbreviated six-week program.
While managing partner William Malley said he hoped not to have to make further cuts, he said he couldn’t completely rule them out. The firm also said it plans to set aside funds for year-end bonuses and special payments for non-partner lawyers and staff, based on firmwide financial performance.
Perkins Coie entered 2020 in growth mode, building on revenues of about $935 million and average partner profits of $1.37 million in 2019. By March, as the economic fallout from the coronavirus began to come into focus, the firm announced internally that it was delaying partner payouts.
Malley and the firm declined to elaborate on the specifics of the partner pay measures but said they were meant to ensure partners bear the brunt of the financial sacrifices. The firm is viewing the current actions as the “second phase” of its cost-cutting measures.
Malley, who was elected to lead the firm in April 2019 after a 10-year run by former managing partner John Devaney, described the measures as a “resilience” effort.
“We have given these decisions very careful thought, starting from the early days of the COVID-19 pandemic when we knew uncertainty was ahead,” Malley said in an interview. “Our first step was in March where we took steps affecting only partners and expenses like travel we knew could be avoided. We have now decided that we should take some additional steps to provide resilience for the uncertainty heading toward the end of the year. We knew these options needed to be fair, transparent and in the name of client service.”
Malley was with Perkins Coie back in 2009, when the firm, like many others, relied on layoffs to trim expenses. He said it was a goal this time around to avoid that.
“We communicated from the beginning that we wanted to avoid furloughs and layoffs,” Malley said. “That was one of the goals of the decision.”
He also said the firm is looking beyond the short term to prepare for larger impacts on the industry.
“It is less about planning for 2020 and more about planning for longer term impact in 2021, 2022 and beyond,” Malley said. “We are seeing that this is not just a recession, but rather a transformational moment. It is something that is going to lead to big changes in our society and our economy, and businesses need to anticipate and adapt to those changes even as we are living through them.”
Malley said one of the major factors in that transformation is more visibility into how people work and what works best for them.
“For some, remote working is a blessing. For others, it is a pain,” he said. “What we have realized is that flexibility matters. We need to make sure all the tools and flexibility in the workday allow people to shape their workday to their own circumstances.”
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