Reed Smith, one of the world’s top-15 international law firms, will cut salaries for all US associates by 10 per cent across the board, from 1 July.

In an internal memo to staff managing partner, Gregory Jordan, said the firm had already adopted changes to its business plan because of the recession, changing client demands, and the competitive landscape in the legal industry. 

Among other things, Jordan said it has meant lower compensation levels for partners, though he did not specify by how much, reports Above The Law. 

Jordan said the firm will set the salaries for the incoming class of first-year associates in the US at a later date, but they will be at least 10 per cent lower than the current levels. 

Jordan said the firm will freeze associates’ salaries in its European and Middle Eastern offices, and will set the starting salary for newly qualified associates in the United Kingdom about 10 per cent lower than the current level. Asian operations are not affected by the action. 

However, the associate bonus program will remain unchanged this year.

Reed Smith has laid off 215 people, including 26 lawyers, since December. The firm also cut 50 legal secretaries last summer. Roughly 150 of Reed’s 1,600 lawyers and 280 of 3,200 total employees are located in the firm’s Philadelphia office.

The news comes only days after DLA Piper, one of the biggest law firms in the world, also announced 10 per cent across-the-board associate salary cuts. 

Drinker Biddle & Reath has also said it was cutting starting salaries from US$145,000 (or higher in other markets) to US$105,000. The firm said that would occur for six months, during which time the new lawyers would focus on intensive training rather than billing hours.

It is understood a further drop in demand for corporate and real estate legal services was pushing the Reed Smith’s drastic decision.