I’ve been asked a few times to comment on this Cesar Alvarez memo to all Greenberg Traurig lawyers, recounted in this DBR story:
Greenberg Traurig fell $10 million short on year-end collections and will leave salaries “at present levels until we get a better financial picture for 2008,” chief executive officer Cesar Alvarez wrote in a memo to the firm’s lawyers.
The year-end memo caused an immediate stir among associates, prompting Alvarez to quickly send a second note to the firm’s 1,750 lawyers saying that he was not freezing associate pay. Associates typically get a raise each year as they become more experienced.
Alvarez told the Daily Business Review that the salary freeze at Miami-based Greenberg is for equity shareholders only.
The internal memos sent Dec. 30 were leaked to the blog Abovethelaw.com, and a copy was obtained by the Review from the blog.
The initial memo was a series of mixed messages praising the employees but warning about “significant challenges” posed by the souring economy and cost-cutting pressures in the legal industry.
Alvarez cited the “wonderful strides” made by the firm, but the memo looked ahead to “this year of uncertainty” and warned about the “need to watch every dollar” and “manage conservatively for the greater good.”
In his memo, Alvarez said the firm had already collected $313.5 million and projected to finish December with $330 million in collected billings — “a great accomplishment when you consider the housing situation, the subprime issues and the dislocation of the credit markets.” The firm was hoping to collect $340 million.
In an interview, he said the firm had its best year ever, 2007 revenue exceeded the firm’s budget projection by $19 million, and revenue is expected to be up by double digits this year.
But the memo said “vocal” clients are “taking action on the perceived high cost of legal services” by asking for lower bills and lower hourly rates or specifying experience levels for professionals assigned to them.
His references to pay were chilling to some.
“We have tried to compensate everyone fairly, and we hope that next year will be no different,” Alvarez wrote. “More will be asked from each of you, and if you answer the call and help our firm have a good year by working efficiently and doing more, we will do out best to reward those who did their part.”
The memo has been a topic of discussion among Greenberg attorneys, but it hasn’t created any deep concern about the firm’s future, said one of the firm’s South Florida lawyers who asked not to be identified.
I think that’s about right. It’s interesting reading that memo how — despite the pressures and challenges cited by Cesar in various markets serviced by GT clients — there is no reference to opportunities for the litigation group to benefit from them. What, is Hilarie Bass chopped liver? That’s pretty telling, IMO.
And though there is reference to increased expenses, I am sure there is a back story there, and that significant efforts are being made to manage that firm more frugally than has been done in the past.