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Law Firm Baker & McKenzie Cuts Pay for Some Attorneys

April 27, 2009
Related Topics: Downsizing, Compensation Design and Communication, Miscellaneous Legal Issues, Latest News
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Baker & McKenzie is reducing pay for some of its junior lawyers, a move other major law firms are expected to follow now that one of the largest has broken the ice.

Two partners described the action as the latest cost-cutting effort at Baker, which, like others, has laid off lawyers and delayed starts for new attorneys amid the legal industry’s worst downturn in a generation.

“Similar to other law firms, we have considered and have been using a range of options to reduce costs across the firm,” Baker said in a statement. “In select instances, we have reduced some salaries to preserve jobs. We are striving to be flexible and to retain as much of our talent as possible with the knowledge that the economy will inevitably brighten.”

John Conroy, chairman of Baker’s executive committee, and Philip Suse, managing partner of the Chicago office, did not return calls seeking comment.

Starting salaries at major law firms rose rapidly this decade to $160,000. McGuireWoods, a regional firm based in Richmond, Virginia, recently said it would cut that figure by 10 percent, to $144,000.

“Nobody wants to pull the trigger on it,” said legal recruiter Kay Hoppe, president of Chicago-based Credentia Inc., referring to the industry’s sensitivity to salary cuts. Baker’s move, she added, will give cover to other law firms.

“[Baker] will be viewed very favorably by everybody,” she said.

It could not be determined how many Baker lawyers are affected, or exactly how deep the pay cuts are.

One partner said the salary reductions were in the 10 to 20 percent range, or less. To some extent, they were designed to mitigate the impact of pay increases made at year-end, when other firms were freezing salaries, said the partner, who did not want to be identified.

Baker, among the world’s largest firms, has 3,600 employees worldwide. Earlier this month, it said it would cut 38 lawyers and 86 paralegals and other staff.

Hoppe said the pay-cut repercussions for Baker would be minimal.

“There’s a flood of associates available,” she said. “You don’t have to be worried about losing your best people.”


Filed by Steven R. Strahler of Crain’s Chicago Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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