Courtesy photoKatten Muchin Rosenman announced its first major austerity measures Wednesday, implementing furloughs and pay cuts but steering clear of layoffs.
The Chicago-founded Am Law 100 firm also said it had launched a new internal fund to supplement the governmental assistance available for its affected workers.
“Given the continuing public health and economic crises, we, like many, had to take a careful look at everything and make tough but necessary decisions in order to maintain the strength of our firm,” Katten chairman Roger Furey said in a statement. “We are mindful of the enormous challenges that individuals and families are facing. Doing our best to take care of our people through these trying times is a priority.”
The firm said it is cutting salaries by up to 20% for attorneys and business professionals who make over $100,000 a year, though no one affected will see their pay reduced to below $100,000.
Those making less than $100,000 in annual salary will see no reductions, the firm said.
The firm also said it would furlough some employees, including business professionals and a small number of staff attorneys, although it did not specify the total number of people affected. Those furloughed will still maintain medical, dental and vision benefits if they were enrolled in the firm’s program, Katten said.
The furloughs go into effect May 1. Katten said it will reevaluate the steps it is taking on a monthly basis.
The firm also said that it is suspending monthly partner dividends, with no payouts coming to the equity partners for April and May, at which point the firm will reassess where it stands.
Katten’s summer associate program, meanwhile, is still up in the air. The firm has been in touch with its summer associates, it said, but no final decisions have been made. For now, the firm said it is most likely looking at pushing the start date back to July, but didn’t provide specifics.
Similar cost-cutting moves have been adopted by a wide range of Big Law firms, but Katten is also joining a smaller group of firms that are working to augment the financial assistance available to employees whose livelihoods are being undercut.
Katten said Wednesday that it has created a Supplemental Unemployment Benefits (SUB) Fund, designed to boost existing state and federal assistance programs and get employees back to, or at least closer to, their pre-furlough pay.
The firm said it expects the SUB fund to help lawyers and staff reach between 80% and 100% of their former pay levels.
Other firms have taken similar steps. Davis Wright Tremaine, for example, created an Employee Disaster Relief Program for its employees. The fund, paid for by the partners, is designed to help with household expenses for employees and offset “financial hardships caused by the pandemic,” the firm said in an email.
The firm is also using a vacation time sharing scheme, allowing employees to “donate” their vacation time to someone else who may need it to deal with COVID-19-related difficulties such as the lack of child care options.
Paul Hastings created an ”emergency fund“ for staff and nonpartner attorneys affected by COVID-19 that will allow firm lawyers and staff to contribute, either for themselves or others, and the firm said it would match those contributions. Paul Hastings did something similar in 2017 for those affected by Hurricane Harvey, but without the matching funds.
Katten said it has been holding weekly roundtables for attorneys and staff to keep them up to date on any measures the firm is taking, inviting feedback on how it might navigate the cost cuts. The firm said it will meet monthly to discuss updates to Wednesday’s announcement.
Katten, which saw a 5.5% growth in revenue year-over-year, also saw its profits per equity partner jump by over 10% year-over-year to more than $1.8 million.
This story has been updated to reflect that a small number of staff attorneys are among the Katten employees being furloughed under the firm’s new measures.
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