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Firm requests 20% cut in salaries for staff earning $65k-plus
An Australian law firm has requested staff earning above $65,000 per year to accept a 20 per cent salary reduction and proportionately reduce working hours for a period of six months.
Tony Zhang
HopgoodGanim Lawyers, which has 41 partners and more than 280 staff working out of its Brisbane and Perth offices, will cut the salary of staff earning more than $65,000 by 20 per cent from 1 May to 31 October 2020.
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The reductions equate to an annualised salary reduction of 3 per cent this financial year and 6.5 per cent next financial year.
Update: Lawyers Weekly has just confirmed that partners are part of another separate 20 per cent cut. The 20 per cent cut also comes with a commensurate reduction in working hours.
This will mean equity partners will also take a 20 per cent cut following an earlier announced 30 per cent reduction in their income.
HopgoodGanim managing partner Bruce Humphrys said in a letter to staff that the pay cuts were necessary to retain jobs and allow the firm to ride out the “storm” caused by the pandemic.
“I understand that the news will be difficult for many to absorb,” Mr Humphrys said.
“I am asking everyone at the firm to invest in our collective futures. While we cannot predict what the future holds nor how long the economic impacts of COVID-19 will last, preserving jobs remains the clear objective of the partners.”
He said the firm’s financial modelling had shown that if the shutdown lasted more than six months it was not likely to reach a level of fees and collections that were sustainable for any period of time without making significant changes to its cost structure.
“It is imperative that we focus further on cash flow,” he said, adding the firm was currently applying to the federal government’s JobKeeper program.
“Nobody really knows how long this virtual shutdown of the country will last, what long-term damage it will do to the economy and how long that damage will need to be worked through,” Mr Humphrys said.
He added that while partners would continue to work normal hours, other staff would have their hours reduced in line with the salary reductions.
In an official statement, the firm stated that there is no financial crisis affecting the firm at present and their aim is to avoid one.
“We do not know what the future holds in terms of the impact of COVID-19 but it would be reckless not to at least recognise the possibility of a period of slower economic activity,” the firm said.
“If circumstances prove these reductions were unnecessary they will be reversed at the earliest opportunity. Until then, like our peers and many other very successful and prudently managed organisations, we will continue to anticipate realistic possibilities, and hope for the best outcomes.”
