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Cyril Amarchand defers up to 30% of pay for senior fee-earners, staff • Equity partners volunteer for zero pay

The hope is that with this somewhat painful move now, future pain can be avoided (though of course no one knows how bad it's going to get)

More fee-earner haircuts in India Law Inc may very well be inevitable...
More fee-earner haircuts in India Law Inc may very well be inevitable...

Cyril Amarchand Mangaldas equity partners have agreed not to draw any take-home pay this financial year in anticipation of worse financial times to come, as the firm has also announced salary deferrals for more senior fee-earners and office staff.

All fee-earners and staff earning more than Rs 25 lakh per year will see from 10% of their fixed salary component in May and June 2020 deferred into a variable component.

At the more senior end, such as senior salaried partners, up to 30% of the fixed salary component could be deferred into the variable.

Significantly, such variable component is discretionary for the firm to pay out; on the other hand, the firm has also not announced a permanent reduction in wages.

“We were not afraid to be first, everybody's thinking about it. It's inevitable that every organisation will have to think about this" said managing partner Cyril Shroff, explaining: “No job cuts, no pay cuts also, for now, at least until June but we have moved a portion of the fixed to variable.”

Shroff added: “We are approaching from a survival mindset to be strong at the other side of this.

“We are spreading the potential pain in a descending order, where the equity partners take the most hit, and junior lawyers take no or minimal hit.

“If things improve, there will be finally no real impact.”

CAM’s equity partnership of around 35 had volunteered to not take any pay this year, Shroff said. “We had a meeting where they [around 35 equity partners] said they would not draw. They have all unhesitatingly and unequivocally said that they wouldn’t draw.”

Regarding the downturn, Shroff said: “It’s too early to tell whether it’s going to get worse or not.”

Actual adjustment amounts will be communicated to fee-earners individually, we understand.

Indeed, Shroff is correct that there will not be a single firm’s management that has not seriously thought about taking similar or even stronger measures, and nearly all international law firms have been making significant salary cuts, deferrals or requested partners for cash calls in recent weeks.

As we had reported on 27 March, Agarwal Law Associates (ALA) had been one of the first. perhaps presciently, to have announced pay cuts for of 30% for those earning above Rs 40,000 per month, after its Supreme Court filing practice had practically fallen off a cliff due to the shutdown of the courts.

Update 15:35: Khaitan & Co has reduced equity partner and senior executive director pay by 20%.

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