VLG slashes associate salaries by 30 per cent

The firm, once at the forefront of dotcom-inspired salary wars, has hacked away at associate pay rates by up to 30 per cent.
Base salaries for first year associates have been cut by $25,000 (£17,600), from $125,000 (£88,000) to $100,000 (£70,400). Third year associates have been hit harder, losing $35,000 (£24,600) from a $150,000 (£105,600) base rate. The firm has put associates on an increased share in the firm's profits at the expense of higher salaries.
Partner Donald Keller said that the decision had been necessary to bolster the firm's profitability. He argued that the move gives associates a greater stake in the firm. “What we're trying to do is treat everybody like an owner in the business,” he said, adding that the move mirrored the firm's policy of taking equity stakes in clients.
The new salaries and points system begins in January. First year associates will gain nearly 10,000 profit points. Currently earning 5,800 points, an associate at this level will move up to 13,500 next year.
VLG has tried a number of cost-cutting initiatives to offset market difficulties. During the last six months, The Lawyer has reported on two rounds of layoffs and the indefinite deferment of new recruits.
In less than three years, average associate salaries at Silicon Valley firms have risen by a massive 55 per cent. And while salary freezes have become part of the region's legal landscape, VLG is the only firm that has decided to reduce pay rates.
Silicon Valley counterparts Wilson Sonsini Goodrich & Rosati, Cooley Godward and Pillsbury Winthrop are all understood to be considering their options regarding remuneration.