Cadwalader, Wickersham & Taft has become the latest firm to take drastic financial measures as the Covid-19 pandemic reaches new heights – suspending partner pay and cutting salaries elsewhere.
The move comes as the number of confirmed cases of the virus in the US soared to nearly 200,000 today (1 April) and the number of deaths reached 4,000. Cadwalader will stop paying partners, reduce associate salaries by 25% and impose pay cuts of 10% to 25% on staff to mitigate the economic impact of the crisis as it hits businesses around the world.
It follows the news on Monday (30 March) that Womble Bond Dickinson has made redundant some US employees and imposed temporarily pay cuts on the rest of its US staff in response to crisis. The firm said it made the ‘hard decision to furlough some selected employees and let go another small group’ in response to the pandemic. ‘In addition, we are temporarily instituting a 10% or less pay reduction (with lower levels of compensation reduced by smaller percentages) for our remaining staff and attorneys.’ The 10% pay reduction applies to those making more than $100,000.
Cadwalader’s measures will take effect today and will last for four months. According to Above the Law, managing partner Patrick Quinn said in an internal note that firm leadership placed a high priority on protecting the jobs of staff, both legal and non-legal and so the first priority was to do its best to avoid any layoffs.
The economic toll has so far been higher for US law firms, with Allen & Overy (A&O) and Reed Smith among the international firms to take less drastic measures so far.
A&O’s steps included altering profit distribution to partners, increasing partner capital levels and freezing some investments and recruitment. Reed Smith’s contingency involved ringfencing a portion of its cash reserves against partner distributions as the crisis unfolds, with monthly drawings reduced by 40% for full equity partners and 15% for fixed share partners globally.