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Simpson Thacher's Time Sheet Policy--Barely Legal?

Vivia Chen

November 30, 2010

IStock_000007927612XSmall Partners, I feel your pain. Squeezed by the bad economy and badgering clients, you really have to hustle to take home that million or two these days. What's more, you face an enemy at your own firm: Lawyers who won't or can't get their time sheets in on time.

Clearly, late time sheets are driving people batty. Recently, I blogged about the partner who's so frustrated with delinquent timekeepers that he's taken to threatening them with public humiliation and firings. And before that, I blogged about Simpson Thacher & Bartlett's new policy of reducing compensation by 20 percent for associates who are ten days late in filing their time records. (Even after the associate is up-to-date on time sheets, Simpson won't restore the lost wages, except in "exceptional and rare cases," according to the firm's employee manual.)  

When a firm like Simpson adopts this kind of draconian policy, it carries authority. But on this one, I've been hearing rumbling from lawyers (at other firms) that Simpson might be going too far. "You can fire someone for not getting in their time sheets, but you can't cut their wages," one lawyer tells me.

Could a firm like Simpson be skirting the law? I asked an employment-lawyer friend for his take. Here's what he says: "It is flat out illegal in New York to make deductions from employees' paychecks for failure to follow company policies."

In particular, he cites New York labor law section 193, which talks about what's considered proper and improper deductions by employers:

No employer shall make any deduction from the wages of an employee, except deductions which a. are made in accordance with the provisions of any law or any rule or regulation issued by any governmental agency; or b. are expressly authorized in writing by the employee and are for the benefit of  the employee; provided that such authorization is kept on file on the employer's premises. Such  authorized  deductions  shall  be limited  to  payments  for  insurance  premiums,  pension  or health and welfare benefits....

But Simpson Thacher has found a clever way to get around this statutory prohibition, explains my friend, by making the salary reduction prospective, rather than retrospective: "I think that is permissible, because it is really not a deduction from pay--it is a reduction in pay, going forward." Still, he says "the policy could be problematic if they routinely reinstate salary retroactively, because then it could be regarded as a de facto deduction." (I also asked Simpson to comment, but haven't heard back.)

So is Simpson out of the woods or not? Well, says my friend, "it would be interesting to know what the New York Department of Labor thinks of this policy. Perhaps someone could request from the department a formal opinion."

Readers--what do you think of Simpson's time sheet policy? Does it go too far? Will this cure late time sheets, or is it inviting legal trouble?

 

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Photo: Eric Hood

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I have friends who are partners at Simpson. It is a well run shop, with great lawyers. This is an absurd issue to over analyze.
Simpson bills clients for hours attorneys worked on a project. When a time sheet is not entered, it is no different than if the lawyer did not show up to work, or elected to work for free - neither of which are permissible or advisable in the business of law.
So, not entering time records is not properly characterized as a failing to follow policy or procedure, but is rather a fundamental failure of performance of employment duties. While such failure may be cured, until it is cured it should properly be treated as a material breach of an attorney’s employment duties.

Having spent nearly a decade in large New York law firm environments (comparable to Simpson, 15 years ago), this was and remains a problem for some firms. But I can tell you from experience that after 10 days, entering time records usually results in less detail and far more importantly, less accuracy. At that point, a whole host of legal and ethical issues come into play. Back when clients tolerated the "For services rendered bill" from a big shop, it was a violation with no real exposure issues. But clients now demand more details of work done, and certain practices, like bankruptcy, demand accurate time entries down to a tenth of an hour. If not entered into relatively real time, such entries face a serious risk of being inaccurate. And if someone actually keeps detailed time records that they can go back to more than 10 days later and make their time entries, well, that A type personality is likely timely with the time keeping entries anyway (or they love to do double the work - once in their own detailed records and then again for the firm's records).
Finally, there's plenty of technology to help and young lawyers and their firms should take advantage of it to make this drudgery of the practice of law less time consuming and tedious.

It would be silly for DOL to get involved: Simpson can simply reduce everyone's pay, and then give "bonuses" for timely timesheet submission.

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The Careerist takes an inside look at how lawyers shape their careers and manage their lives. The blog aims to dissect developments in the profession, provide useful information and advice, and give lawyers a platform to voice their views. The goal is to provide a fresh, provocative take on the state of lawyering.

About Vivia Chen

Vivia Chen

Vivia Chen, The Careerist's chief blogger, has been covering the business and culture of law firms for a decade. A former corporate lawyer, Chen is fascinated by those who thrive (as well as those who don't) in the legal profession. Her take: Success in the law (and life) doesn't always travel a linear path. If you have topics you'd like to discuss or information to share, contact her: VChen@alm.com

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