Hughes Hubbard & Reed LLP on Tuesday confirmed it had cut wages and laid off an undisclosed number of associates and staff, despite securing a loan as part of the federal government’s COVID-19 relief efforts.
The New York law firm in a statement to Law360 said it had to change the way it does business due to “the profound impact of court closures and slowing transaction activity” caused by COVID-19.
Law firm AM 200, with gross revenues of $ 288,100,000 in 2019, was one of 45 large law firms that applied for loans worth between $ 5 million and $ 10 million. dollars intended to save jobs during the economic shutdown caused by the pandemic.
“We were one of more than 100 companies who decided at the start of the pandemic to ask for the [paycheck protection program] and have been approved on the basis of [Small Business Administration] Criteria. This money was used for its intended purpose, to save jobs at the height of the crisis. the company said in a statement to ABA Journal. “Now, more than three months after the start of the pandemic, the profound impact of court closures and a slowdown in business activity have given us a more informed idea of how the pandemic has changed the way we do business. Like other companies, we have made tough staffing decisions to cope with today’s environment. We regret the difficulties these steps cause as we and the industry evolve to cope with this changing environment. We are confident that the actions we take today will enable us to serve our customers, be competitive at the highest level and deploy our people effectively.
Hughes Hubbard wasn’t the only high-income law firm making cuts and layoffs despite getting the PPP loan.
According to an analysis of Small Business Administration data and corporate announcements on spending cuts, at least eight other large law firms that have received significant sums from the Paycheck Protection Program have done so anyway. layoffs and holidays.
Schiff Hardin received a loan of $ 5-10 million on April 6. After two weeks, the firm – with gross revenues of $ 186,437,000 in 2019 – announced it was slashing salaries for lawyers and staff, including pay cuts of up to 50% affecting about 6% of the attorneys at the Chicago-based firm.
Day Pitney announced he would cut salaries by 15% for all lawyers and some staff on April 8. On the same day, the firm obtained a loan of between 5 and 10 million dollars.
Bremer Whyte Brown & O’Meara laid off or laid off 15% of its lawyers and 20% of its employees in April. The company received a salary protection loan.
Smith, Gambrell & Russell announced 10% pay cuts for lawyers and staff on the same day they received the $ 5-10 million PPP loan.
Kelley Drye & Warren, who took out a $ 5 million to $ 10 million loan on April 11, slashed the wages of employees earning more than $ 100,000 three days later by 10%.
The rest of the businesses — Sullivan & Worcester; Ice cream maker; Curtis, Mallet-Prévost, Colt & Mosle; and Pryor Cashman – instituted pay cuts or layoffs before receiving the loans.
Sullivan & Worcester managing partner Joel Carpenter told LAW.com that the money from the PPP loan had saved the company from larger cuts.
“The first thing the PPP loan allowed us to do was limit the austerity measures to those described previously,” Carpenter said. “We didn’t have to fire anyone.
Almost all of the companies that have received PPP loan funds recorded revenues of more than $ 100 million last year, according to data from AM.
At least 40 firms have received loans worth between $ 5 million and $ 10 million, and only five law firms have raised funds between $ 2 million and $ 5 million.
In total, the companies received between $ 205 million and $ 415 million.
Companies will have to repay part or all of the loan if they lay off employees and have a smaller workforce than the number declared when the loan was granted. Recipients will also have to pay some or all of the money if they reduce the salaries of employees earning less than $ 100,000 by more than 25%.