In an effort to avoid layoffs, Marshall Dennehey halts retirement matching
While suspending 401(k) matching will not fully cover the revenue the firm anticipates it will lose, layoffs are not expected.
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Marshall Dennehey Warner Coleman & Goggin president and CEO Mark Thompson announced in a firmwide email Monday that it is suspending its 4% employer 401(k) match until next year. The policy is effective May 1. Marshall Dennehey is a large law firm devoted to civil defense litigation, with over 500 attorneys across six states.
The plan is the only retirement option offered firmwide and has around an 80% participation rate among the firm’s 1,200 employees, Thompson said. Thompson did not disclose how much the policy will save, and said that he fully expects the matching to return in 2021.
“We’re trying to offset these losses and live up to our family values and keep everybody together. This was a measure we could take as an alternative to layoffs and pay cuts,” he said.
As of now, the firm is still relatively busy, Thompson said: it has recently opened 845 files, processed $4 million in invoices and submitted over 150 appeals. Thompson said because it is a litigation firm, Marshall Dennehey will be hit less hard than other, transaction-heavy firms. He even expects new matters to grow in areas such as insurance coverage.
But the firm has not been spared of the effects of COVID-19 and the policy mechanisms deployed to combat its spread, like social distancing and the shuttering of nonessential businesses. Thompson said collections are down as clients have begun to put off billing or negotiate lower rates; courts are closed as are jury trials in nearly all jurisdictions. The firm also spent money to transition its entire 1,000-plus-employee workforce to a remote setup for 20 offices in six states, an arrangement that Thompson believes will lead to an inevitable drop in productivity.
“The fact of the matter is that we’re facing some impediments that haven’t come to fruition yet,” Thompson said. “We’re proud [of our remote transition], but it just isn’t optimal. Our productivity will inevitably decline given the disruption and billing with the courts closed.”
Despite these challenges, Thompson and firm leadership have deep reservations about cutting head count or salaries. While suspending 401(k) matching will not fully cover the revenue the firm anticipates it will lose, Thompson said he does not anticipate firm layoffs. He said he prides the firm on having a family environment, and he loathes the idea of a laid-off employee losing their health insurance in midst of a public health crisis.
The response from employees, Thompson said, has been overwhelmingly positive in light of the cuts that have already been announced across the industry. Last week, Law.com reported that three firms in New York had made staff cuts: Goldberg Segalla—which, like Marshall Dennehey, is an Am Law 200 firm focused on insurance defense—as well Belkin Burden Goldman, Robinson Brog Leinwand Greene Genovese & Gluck and Heiberger & Associates.
Law.com reported Monday that Womble Bond Dickinson has begun laying off associates and staff. The firm also reportedly announced a 10% pay cut for anybody making over $100,000 and a smaller cut for those making between $50,000 and $100,000.
Meanwhile, Reed Smith confirmed Monday that it will be “slowing” partner distributions because of the economic effects of the coronavirus.
“There are a lot of people looking around to our peers and competitors and have seen people laid off. It has caused a lot of angst,” Thompson said. “We have received expressions of gratitude. Some people told them the email made them cry, that they’re proud of the firm. People are scared and we’re trying to give them one less thing to worry about.”
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