Last week Slaughter and May announced it was reducing salaries for newly qualified solicitors in response to the coronavirus pandemic. And UK partners at Osborne Clarke have been subject to further reductions in pay, while staff are also in line for a cut in their salary.

1. And here come the pay cuts: the Magic Circle starts slashing
25 May 2020 – Last week Slaughter and May announced it was reducing
salaries for newly qualified solicitors in response to the coronavirus
pandemic.
And UK partners at Osborne Clarke have been subject to further reductions
in pay, while staff are also in line for a cut in their salary.
At Slaughter and May, NQs qualifying in September will now receive
£87,000, a reduction on the £92,000 base salary that this year’s crop take
home.
Salaries often drop in times of recession. For example, NQ pay at Clifford
Chance dropped from £50,000 to £48,000 between 2001 and 2002; and
from £66,600 to £59,000 from 2008 to 2009.
But many other salary reductions have started to roll out across the UK legal
profession.
UK partners at Osborne Clarke have been subject to further reductions in
pay, while staff are also in line for a cut in their salary.
The measure, which will be in place starting in June for 11 months, adds
itself to the existing deferral of 75 per cent of their quarterly profit
distributions.
In addition, the firm has reduced the pay of some of its staff members by 7
per cent under the same time frame of the partnership. The cut will affect
employees earning £30,000 or more. In case the reduction theoretically
dragged the salary of certain staff under that figure, they won’t see their pay
go under £30,000. Benefits and pension contributions will still be provided.
Managing Partner Ray Berg:
“We have taken our time to assess the situation to forecast what we
see in the next few months. Activity levels have been impacted. We
want to give people certainty and enforce measures that allow us to be
stable in the next 12 months.”
Asked whether the firm is considering external credit facilities, Berg said
that, while they monitor the situation, everything is under review. However,
no immediate plans in this sense have been made.

2. The more than 100 staff members that were furloughed previously until the
end of May have seen this period extended until the end of June.
Berg added that it has set a 2020/21 financial year target ambitious enough
to pay back the salary reductions in 11 months.
The firm has offered a series of options such as part-paid sabbaticals, early
retirement, hours reduction or job-share. This has allowed the firm to avoid
putting in place a four-day working week.
He added that management is currently undergoing transition planning to
understand how to implement a return to work strategy following
government guidance.
The latest set of measures come as the firm has recently said it has made
additional capital contributions described as “long-planned” and agreed
before the crisis to invest on the expansion of its client services.
Other measures include the deferral of pay reviews initially supposed to be
held in July, which will instead take place in November.
And two weeks ago fee-earners in quieter practice areas at DAC Beachcroft
took taking temporary pay cuts in line with reduced working hours, while the
majority of the firm’s most recent profit distributions have been withheld.
This means that partners have at least received some of their distributions,
unlike other firms, although the rest of the payments have been suspended
until further notice.
In areas of the business affected by reduced levels of work, some lawyers,
including partners, have been asked temporarily to reduce their working
hours and pay by 20 per cent.
The firm is still proceeding with bonus payments for the current financial
year, but they will be split between 50 per cent in July and the rest later on
in the year. Annual salary reviews that were scheduled for August have also
been deferred.
Some of the firm’s staff have been furloughed and asked to join the UK
Government’s job retention scheme, such as paralegals and support staff,
however, the firm is topping up salaries to 100 per cent.
DAC is also allowing employees to take unpaid leave or sabbaticals on a
voluntary basis.

3. In response to these latest measures, DAC’s managing partner David Pollitt
said:
“Some parts of our business are facing increased demand for our
services; however, there are other parts where our clients are facing
severe challenges and their demand for legal services has or will be
reduced in the short term. In those areas, we need to take action to
ensure the continued sustainability of our business. Also, the firm is
not delaying its upcoming partner promotions. While for many the
focus of attention is understandably on the here and now, it is also
vital that we continue to look to the future and assess how we can
improve our service and our competitive advantage. One way is
through the continued investment in our people, including our latest
promotions round.