Reed Smith on Wednesday joined the ranks of firms cutting associate salaries, and senior associates aren’t immune this time. The firm is cutting associate salaries 10 percent across the board. Incoming associates will make at least 10 percent less, according to a firm memo.
Looks like partner pay also got chopped at Reed Smith. The memo, which was first posted on the blog Above the Law, says the firms has changed its business model in response to the economic downturn: “Among other things, this has meant lower compensation levels for partners.”
A chat with Reed Smith management, after the jump.
First-year associates in major cities made $160,000 prior to the change.
“Effective July 1, 2009, we will reduce associate salaries in the U.S. by 10% across the board. We will set the salaries for our incoming class of U.S. associates at a later date, but the new salaries will be at least 10% lower than current first year levels,” the memo said.
Eugene Tillman, global head of legal personnel at Reed Smith and a partner in the firm’s Washington, D.C., office, said the move came in response to the economic client and the difficulties clients are facing.
He said clients are asking more for alternative and fixed-fee billing arrangements, but would not say whether associate billing rates were adjusted along with the salary decreases.
“We are working with our clients to meet their needs and there are lots of different ways we are doing that. When we are doing a fixed fee, the actual associate billing rate may not be relevant,” Tillman said.
Reed Smith is the tenth large firm with a Bay Area presence to cut salaries, including DLA Piper and Nixon Peabody, which recently cut to $145,000 for first years.
Tillman said they had been thinking about the pay cuts for a while, and were also aware of the salary changes at other firms.
“What we are looking at on the merits and what was happening in the industry was lined up,” Tillman said.
We called back to follow up on the memo’s line about falling partner compensation, but Tillman hasn’t immediately gotten back to us.
— Amanda Royal
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