Israeli law firms cut salaries, put staff on unpaid leave

Zvi Piron, Pinhas Rubin and Erez Aharoni / Photo: Kadya Levy, Eyal Izhar, Noam Galai

The only upturn in business is with clients seeking to get out of contracts, asking about labor law for employees, and enquiring about bankruptcy.

The Covid-19 outbreak continues to paralyze the economy and is striking the business sector with full force. The Tel Aviv Stock Exchange TASE) is plummeting, businesses and companies are tumbling into trouble, and the public is having to stay at home in order to avoid the risk of infection, and in order to care for their children, now that schools and kindergartens have shut down. The crisis is also deeply affecting law firms and the courts.

In a story published this week in "Globes," David Zalmanovitsh, a law sector consultant, drew conclusions from previous crises for the current crisis, and gave advice to law firms trying to operate at this difficult time.

"Globes" then asked the law firms themselves, and tried to find out how they were preparing for the crisis situation, and how it was affecting them and their clients. As reported yesterday in "Globes," the most drastic steps to date were by Gornitzky & Co. and Zysman, Aharoni, Gayer & Co., two large law firms, which announced across-the-board salary cuts and putting employees on unpaid leave, sources inform "Globes."

Gornitzky & Co., Adv. Pinhas Rubin, notified all of its employees that it was taking cost-cutting measures: the salaries of all lawyers and administrative personnel will be cut by 30%, and 20 office workers will be sent on unpaid leave. Sources told "Globes" that the firm's senior partners (sharers in the profits) would not withdraw profits for the quarter ending in two weeks, and would refrain from withdrawing any profits until further notice.

Gornitzky & Co., one of Israel's oldest law firms, has over 220 employees. Among its clients are billionaire Yitzhak Tshuva and Delek Group, which has recently become mired in crisis. Sources in the firm told "Globes," however, there was not connection between this crisis and the firm's new measures.

"Globes" has also learned that Zysman, Aharoni, Gayer & Co. (ZAG-S&W), managed by managing partners Adv. Erez Aharoni, which has 161 employees, 81 of them lawyers, notified its employees of substantial cutbacks as a result of the coronavirus. The capital partners will withdraw only half of their planned yearly salary, while salaried partners will have their pay cut by 25%. Salaries of the firm's lawyers will be cut by 15%.

ZAG-S&W also notified all of its employees by email that some of them may be put on unpaid leave for at least 30 days, and that an exceptions committee would hear individual requests motivated by personal difficulties.

Other law firms are currently weighing similar cost-cutting steps. Senior partners, including heads of firms, told "Globes" that they believed that more large firms would also take such measures in the coming days, and that they would hold meetings on the subject soon.

Laptops and cameras

Some of the firms with which "Globes" spoke understandably tried to give the impression of calm and "business almost as usual." Between the lines, however, it is easy to see that their grave concern and the severe consequences of the crisis.

Lipa Meir & Co. managing partner Adv. Alon Pomeranc said that his firm, which has 120 employees, had prepared ahead of time to provide full support for clients and employees, and could work full-time from home for a prolonged period through the use of various means of communications. He said, "Most of our lawyers have already switched to working from home, as recommended by the Ministry of Health. A number of notices to clients were posted, and the guidelines for partners and lawyers are to maintain regular contact with the clients, advise them, and support them."

Pomeranc says that despite the recommendations to work from home, some of the lawyers still have the option of going to the office. He added, however, "We are trying to avoid meetings, and certainly meetings with many participants. In addition, the instruction for department managers is to show flexibility and consideration for employees at this challenging time."

"Globes": Is there an increase in calls from a certain type of client?

Pomeranc: "Yes, there is an increase in calls from clients in difficulties or at the brink of bankruptcy. There are also many calls from clients seeking release from contractual commitments, or to postpone them because of 'frustration' of contract or force majeure. In addition, the labor law department is getting many calls about the actions of employers towards their workers."

"Globes" has learned that partners and associates at Lipa Meir will take a salary cut of 25% while partners will not withdraw any profits. Interns will take a 15% salary cut but there are no plans to send any staff on unpaid leave.

Adv. Zeev Pearl, a managing partner at Pearl Cohen Zedek Latzer Baratz, which has 330 employees, says that as a global law firm with branches in Israel, the US, and London, a large proportion of the meetings in current management are taking place via conference calls. He told "Globes," "We sent a message to employees and clients launching an information center for legal issues and conundrums pertaining to the coronavirus and its effects on doing business. A large proportion of lawyers and patent attorneys always work from home for part of the week. Our recommendation is to allow anyone who can to work from home, and most of the employees have chosen to do so. We have therefore supplied laptops to all of the employees, and cameras to whoever needs them."

Are there special arrangements for parents with children?

Pearl: "We understand the situation, and the need of parents to work from home while they are taking care of their children, some of whom are very young and need close attention, and we take this into account. We thought about holding a kindergarten, but the Ministry Health guidelines make it impossible."

Adv. Zvi Firon, head of the M. Firon & Co. law firm said that most of his firm's 350 lawyers are working from home. "Meetings have been turned into telephone calls, video and conference calls in order to protect the health of our employees and clients. Laptops and other equipment have been bought to ensure remote working."

Published by Globes, Israel business news - en.globes.co.il - on March 18, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Zvi Piron, Pinhas Rubin and Erez Aharoni / Photo: Kadya Levy, Eyal Izhar, Noam Galai
Zvi Piron, Pinhas Rubin and Erez Aharoni / Photo: Kadya Levy, Eyal Izhar, Noam Galai
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