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Bingham McCutchen chairman Jay Zimmerman has refused to rule out a salary cut for the firm’s associates.
“Whenever there’s a paradigm shift like this, everything is on the table,” Zimmerman said. “We’re in the process right now of looking at our entire cost structure, and will continue to look at all of this in a way that makes most sense for our firm and our clients.”
A reduction in associate pay, along with headcount reductions, is one of the few variables available to any law firm looking to cut costs.
The current process of assessing a potential salary cut at Bingham began around three weeks ago but, at least for the moment, Zimmerman was adamant that no decision had been taken.
Neither, he said, was he waiting for a green light in the form of a rival firm cutting associate pay.
“I’ve said we’ll look at all of this in a way that makes most sense,” he added.
Bingham, like most of its rivals, has already taken several steps to cut costs. In January it froze associate salaries, while last month it laid off 16 lawyers along with 23 support staff from across its international network.
At the time the firm said that the layoffs were part of firmwide cutbacks in Bingham’s corporate practice, as a result of a reduction in the demand for the department’s services.
Last week, however, Zimmerman argued that the most significant driver behind Bingham’s headcount reductions was the sudden lack of natural attrition in the market and at his firm.
“When you see our layoffs, what you’re primarily seeing is a reduction of our workforce that reflects the economic climate and that adjusts to the new attrition model,” said Zimmerman.
“In today’s market, firms have to look at the delivery of services with an eye towards maintaining quality while increasing efficiency.”
Although Bingham’s headcount in March was around 1 per cent down on the previous 12 months, the billable hours recorded for last month were the highest ever in the firm’s history, with the firm’s restructuring, insolvency and securities regulatory practices picking up the slack from the reduction in corporate instructions.
Nevertheless, the firm has yet to decide how many of the 75 summer associates it is taking on will receive offers. Traditionally in US firms, almost 100 per cent of summer associates would receive offers.