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NEWS JULY 27, 2020 ¦ 13

financial data and its practice area activity have al-
lowed it to go against the grain.
“We honestly considered the same cuts you’ve
seen other firms do, but we carefully watched our
data every single week and didn’t feel like we needed
to make those cuts,” he said. “At the same time, we’ve
built enough of a cash reserve so we could restart
distributions to our partners. We’re still monitoring
financials every week, but we have confidence that
we have the balance sheet we need.”
Cozen has also reversed course after the firm in
April and May asked partners to defer between 10%-
20% of their compensation to the end of the year Shutterstock

and furloughed nearly 10% of its administrative staff The firm’s managing partner, William Munck, did
through July 31. Firm executive chairman and CEO not return a message seeking additional comment
Michael Heller said in an email that as of July 1, the about furloughed employees.
firm is once again paying partners fully. R. Bruce McLean, a law firm management con-
However, Heller did not return a message seeking sultant at Zeughauser Group, said firms reversing
additional comment about the status of the fur- cost-cutting measures were anomalies, but a wide
loughed employees. A firm spokesperson declined disparity in how the pandemic is affecting firms’
to comment about furloughed staffers. businesses -- based on practice mix and geography
BCLP in April cut pay by 15% for employees mak- -- could be making the difference.
ing more than $40,000 for 13 weeks; reduced the “My insight is that payroll and draw reductions
salaries of its London-based newly-qualified lawyers were instituted to deal with what was, at the time,
by 2.5%; and furloughed some paralegals and assis- uncertainty about cash flow and liquidity,” he said in
tance. In July, the firm reduced all-employee pay an email. “Since those early days, there has not been
cuts from 15% to 7.5%, but the firm also planned a significant disruption in cash flow from what was
to conduct layoffs, including at least 40 positions in a pretty good first quarter for work, thus permitting
London, and planned to close its Bejing office, Law. a reversal of conservative cash management.”
com earlier reported. Even so, McLean said the legal industry as a whole
“After exceeding performance expectations during is bracing for a subdued financial year in 2020.
the first half of this extraordinary year, we’re pleased “A significant number of firms, but not all firms,
to begin rolling back salary reductions necessitated are predicting a shortfall from budgeted annual
during the worst of the pandemic conditions,” BCLP revenue,” he said. “Those shortfalls will extend into
co-chairs Lisa Mayhew and Steve Baumer said in a 2021, and more permanent expense reductions may
statement at the time of the recent changes. be what is called for, although most firms have in-
It’s not just Am Law 200 firms that have found more dicated that they are not yet ready to proceed with
financial footing. Midsize Texas firm Munck Wil- head count reduction. Time will tell: by the end of
son Mandala this spring reduced compensation for the third quarter, firms will have a more reliable read
partners, associates, exempt directors and managers; about business flow through the pandemic.”
furloughed some salaried employees; and reduced Brenda Sapino Jeffreys contributed to this report. ¦
hours for some hourly employees. Several partners
also chose to defer their base salary for three months. Samantha Stokes, based in New York, is a staff re-
As of July 1, a firm spokesperson said, it had re- porter at American Lawyer covering the business
sumed normal pay for all employees, and it did not of law. You can reach her at [email protected] or
reduce its head count. on Twitter: @stokessamanthaj.

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