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Friday, November 27, 2020

40% Pay Cut, 140% Full Time Load

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It’s been fascinating watching law firms react (in advance) to what they believed was going to be the horror story of COVID-19.

I get that these kinds of business decisions aren’t easy, and they remain one of the many reasons that pursuing law firm partnership fell off my to-do list a while back.

Faced with the impending doom of a significant downturn of legal demand, law firms responded in a variety of ways:

  • do nothing much
  • fire people
  • “offer” staff a 20-40% pay cut on the basis of a 20-40% reduction in associated hours.

Many of these decisions were made not on the basis of an ACTUAL downturn of work, of course, but the prediction of such a downturn.

Whether or not those predictions were true remains to be seen. Given that most firms don’t actually publish their gross revenue and net profit per partner, it seems unlikely we’ll be finding out precisely how things went any time soon.

It’s been a lean year.

But the real question is: how on earth are lawyers supposed to respond to this literal pay cut when it’s accompanied by a fictitious reduction in work hours?

The Pay Cut is Simple Maths

If you’re earning $100,000 a year and you get a 20% pay cut then you’re now earning $80,000 a year.

Simple, right? You actually receive less actual money in your pocket each payroll.

The Hours Cut is More Like Philosophy

The legal profession has long been an industry where its participants don’t pay close attention to the hours that they work.

This is because, of course, lawyers are:

  • there to do a particular job
  • not paid by the hour (normally)
  • not governed by normal awards which regulate what “full time” hours they should be working
  • generally very dedicated and hard-working individuals
  • sensible enough not to try and keep track of demoralising numbers.

So, in one week a full time lawyer might work 40 hours, only to work 64 the next.

It’s highly variable and nebulous.

So how on Earth is any sensible person going to actually measure the means by which a lawyer should be working 20% less in exchange for their 20% pay cut?

They can’t.

And no lawyer with professional pride (who values their job) is going to turn the tap off once they hit 32 hours a week. Just imagine it:

  • Supervising partner calls: “Hi Joe, do you have a minute?”
  • Lawyer: “Sure do Paul, unfortunately I’ve maxed out my 80% contribution for this week. Can it wait until Monday?”

Never. Going. To. Happen.

Call it What it Is – A Pay Cut

Now it’s true, law firms might have less work on at the moment, and their lawyers might have less work to do.

But if, during these measures, the work amps up (say a large job comes in) are these lawyers going to get put back on their full rates? Are they going to be comfortable clocking off once they hit 80% normal workload (whatever that means)? Probably not.

So in the interests of fairness and good will to all lawyers, why don’t we just call these measures what they are: a pay cut.

Pay cuts are serious business, but life is real and stuff like this happens.

But let’s at least call it what it is, and not dress it up like a pig in a petticoat.

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