Above the Law, the gossip blogloid (that previously has pretty much scoffed, jeered and laughed at paralegals) printed a sobering story today. Apparently, the law firm of Allen Matkins, known for its quality reputation in real estate law, rounded up its paralegals in three offices and presented them with a 20% pay cut.
In previous years, Allen Matkins was known for paying its paralegals the higher end of the pay scale. Although the post indicates that this has not been the case for the past few years, if memory serves me, Allen Matkins was one of THE firms to be at. Now, however, according to the post:
"Associates and paralegals all met individually with two partners who notified us of the pay cut and told us that if we could manage to get our billable hours up to goal before the end of the year we would get the full 20% back. And if we could get to a slightly smaller goal, they would return 10%. There were no explanations about how they arrived at these various figures and at that time we didn't know that first years' salaries were only being cut 10%. We were told this measure was needed to avoid further layoffs although there were also a number of people let go that day."
Above the Law states that they haven't heard of paralegals getting pay cuts. I don't know where they've been but our office has been flooded with calls from paralegals who have not only lost their jobs (some after 20+ years at the same firm), but from those whose salaries have been cut and duties doubled. Some have had their responsibilities downgraded to more clerical responsibilities and some have stepped in on what was formerly associate level duties.
The paralegals at Allen Matkins are mystified as to how partners could give associates a 10% pay cut and hand paralegals a 20% decrease in salary. It's really not too much of a mystery. Historically, paralegals are much more profitable than associates. Cutting a paralegal's salary will make them even more profitable and, should the firm lose them as a result, the firm is not out as much money as they would be should they turn over an associate. It costs a firm much more to recruit and invest in an associate than a paralegal. It has nothing to do with how much money a paralegal or an associate is making. It has to do with percentages of profit.
Further, the partners laid a tough one on the paralegals by giving them an "incentive" to get back the 20% of cut dollars if they met billable goals. It's not clear from the article whether the paralegals could have reached the goals previously set by the firm but chose not to or failed to meet the goals because of lack of work. At any rate, partners need to be aware that setting goals not previously attained becomes dicey when paralegals are not accountable for work coming in. This type of practice can lead to inflated hours, low morale and employee desperation.
It's a very tough time out there. Let's hear from paralegals who have been merged, purged or otherwise scourged. Let's also hear those success stories – those who have been downsized, rightsized and out-sized who have now found good jobs or at least transitional ones to get them through whatever is left of this economic hurricane.