Biglaw, Bonuses, Layoffs, Money, Skaddenfreude

Nationwide Layoff Normal Associate Review Process Watch: A Rebuttal to the Rumors About Kirkland & Ellis

Kirkland Ellis LLP logo Abovethelaw Above the Law blog.JPGSome sources at Kirkland & Ellis have been upset by our recent coverage of layoff rumors. These rumors were focused on K&E’s office in Chicago, but New York was also implicated.
As we’ve repeatedly noted, these rumors are just that — rumors. We were reporting more on the existence of the rumors, as opposed to offering them for their truth value.
But let’s say the rumors are true, and K&E has adopted more rigorous associate review standards this year, in light of growing economic uncertainty. Would that be such a bad thing? Consider this

Kirkland & Ellis is one of the nation’s preeminent and most profitable law firms. So it appears they have a sound strategic business sense and are watching the bottom line. What is wrong with that? Don’t a lot of us aspire to work for a preeminent, highly profitable firm?

A law firm feels economic cycles. I’d much prefer to work for a firm that aggressively manages staffing levels as opposed to letting underproductive people [stay on indefinitely].

Recall that K&E’s bonuses have historically been well above market. If K&E is trimming some fat, so it can once again pay generous bonuses to the associates who DO meet its standards, what’s wrong with that?
Remember, too, that K&E, unlike most other Biglaw shops, doesn’t pay lockstep bonuses. Bonuses at Kirkland are highly individualized. In this sense, could K&E be the law firm of the future? Evaluate associates according to their individual merits, richly reward the superstars, and dump the underperformers? Might this be a better business model than the traditional “treat unequal associates equally” model of Biglaw?
Nevertheless, some Kirkland lawyers resist even this favorable characterization of the firm. They claim that K&E’s associate review process was conducted exactly as it has been in past years — that it was simply “business as usual,” and the same standards were applied this year as in prior years.
It’s only fair to give equal time to their views. Check out their rebuttals, after the jump.

One source writes:

I don’t see anything in your report that suggests Kirkland has changed its policies. I certainly have seen plenty of times when folks get slammed in reviews and then, sooner or later, head for the door.

Sometimes an associate goes to work on a new case for a new partner, and for whatever reason, it doesn’t work out. So while it is not common, it is hardly unprecedented to have someone who was highly rated the year before — based on the reviews of Partner A — who winds up getting slammed by Partner B. If you’re not talking to someone with hearsay info from partners on the review committee, I’d be quite skeptical.

We previously described a rumor to the effect that K&E is now placing a greater emphasis on hours in rating associates. This source takes issue with that:

Kirkland always has factored in hours, indirectly, in determining associate rank. “Good” associates tend to be overachievers, who say yes when work is offered, and who seek out new work when they have time on their hands. So while as a theoretical matter, there is a “quality” ranking that is separate from billable hours, the two have always been correlated. Put another way, you rarely see folks getting “above class” or “top of class” when they haven’t billed above the mean number of hours.

A different tipster offers hard numbers to dispute the layoff rumors:

There are 303 associates in the Kirkland office [in Chicago]. Telling less than 10 of them that their performance does not meet standards is hardly a layoff; it is business as usual. There are always a few people every year during reviews who are told that they are not meeting the most minimal of billable requirements and/or the quality of their performance does not meet Kirkland standards.

Some of the more recent rumors we’ve heard, which we may pass along in the future, cite higher numbers than 10. But the number of 303 associates does put things in perspective. Even 15 associates would amount to less than 5 percent of K&E’s total associate population.
It’s also possible that the number of associates asked to leave was lower than 10:

I’ve seen the chart for this year’s associate reviews in Chicago. For first and second years, we have a three-tier system (above the class, with the class, below the class); for third years & up, we have five tiers (top of class, above the class, with the class, behind the class, really behind the class as in you should get a new job within 3 months).

Only 3 associates in the Chicago office got the “really behind the class” rating (with respect to which, from what I understand although do not know firsthand, you have 3 months to get a new job).

Furthermore, contrary to rumors of slowness, some departments are busy and looking to expand:

As for hiring, as always, our hiring is based on the firm’s needs. Certain departments are hiring, certain departments are not. In corporate, the firm is actively seeking senior associates in certain practice areas and very actively looking for more paralegals.

In summary:

The firm’s financial health is strong and the firm is very busy; this is the ordinary course review season being blown out of proportion in ridiculous ways.

We thank these sources for taking the time to share their thoughts and information with us. If you have K&E inside information that you’d be willing to provide, please email us. Thanks.
Earlier: Nationwide Layoff Watch: Are the K&E ‘Layoffs’ in the Eye of the Beholder?
Nationwide Layoff Watch: Kirkland & Ellis (Chicago)

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