Biglaw, Job Searches, Layoffs

Nationwide Layoff Watch: Are the K&E ‘Layoffs’ in the Eye of the Beholder?

Kirkland Ellis LLP logo layoff laid off Abovethelaw Above the Law blog.JPGThere seems to be a lot of hostility towards our coverage of layoff rumors. That’s fine — go ahead, shoot the messenger. But don’t say that we didn’t warn you. It would be irresponsible to write about “NY to 190″ rumors while ignoring similarly reliable (or unreliable) layoff rumors.
Also, rumors — even when untrue — can be revealing. The very existence of a rumor reflects the state of the market and sheds light on the psyches of the participants. The fact that pay raise gossip has been supplanted by layoff gossip is telling.
We received many interesting responses to our recent post about layoff rumors at Kirkland & Ellis. Like this one, from someone at K&E (and not one of The Departed, so without an ax to grind):

Surprised it took you so long to pick up the layoff rumors, though I guess K&E has done a reasonably good job of keeping them quiet, even to its own associates.

(1) Associate reviews were just completed.

(2) 6-8 mid-level associates [in Chicago] have recently and abruptly left the firm. Rumor is that they were canned. I know two of them personally, and neither of them had ever indicated a desire to leave.

(3) As for causes, I initially heard that extraordinarily low hours were to blame. Other sources suggest that performance was an issue.

(4) At least one of the layoffs really has people baffled: good hard worker who appeared to put in reasonable hours…. [T]he response in the Chicago office appears to be a bit bewildered, especially with respect to the one associate who seemed to be very well-regarded.

More information, compiled from multiple Kirkland sources in different offices, appears after the jump.

As for the department the affected associates were in, we hear that most (if not all) were in litigation. But there are rumors of associates being affected in other departments too (e.g., tax).
Corroboration from another tipster about the Chicago news:

For what it is worth, I heard about two such “layoffs” from an associate at K&E in Chicago about two weeks ago. The details of both associates’ stories fit the facts in this paragraph from your post:

“Sources say that these associates (1) were told that they had until the end of this year to find new jobs, and (2) were not previously made aware of any problems with their performance. In other words, they weren’t warned, maybe six months or a year ago, of problems with the quality of their work or their hours that had to be cured.”

We’re also hearing this phenomenon has spread in New York:

The “stealth layoffs” are also occurring in the New York office. In our reviews, we were told that the firm was cracking down this year. I have talked to a number of third- to fifth-years in New York and a significant number of them got reviews that were completely unexpected and nothing like what they had received before.

There is an associate in our group who is well-liked and has received a number of outstanding reviews in the past. This associate probably billed close to 2800 hours or above. I have worked with this associate in the past and believe him/her to be one of the best in their class. The associate was graded as “with class” (instead of above class). That was shocking to me.

We even heard from one of The Departed:

I was completely floored at my review. I had never received anything like it in my life. I was told that it would be a good idea for me to look elsewhere.

For about two weeks, I basically walked around like a zombie. Then, word slowly started leaking about what was going on in the reviews (at least in our department). I’m not sure why the firm is doing this. I’m not sure what to think about Kirkland anymore. I guess I’m still shell shocked.

But one K&E source contends that the rumored layoffs are just business as usual — departures in the normal course of the firm’s standard associate review process:

[T]he rumors you are hearing may very well be due to the normal review process here, which just happened in September. As I’m sure you know, we are each given a rating of “with class,” “above class,” or “below class.” Particularly for more senior associates, if you are ranked below class, you are often expected to leave — and you aren’t always notified in advance or given a second chance.

This is true regardless of how well the firm is doing financially. Hearing that 10 people in the Chicago office were ranked below class would not be not surprising considering the size of the office. This seems like a far more plausible scenario than random layoffs, especially considering the fact that all I hear about lately is how we need more associates.

Fair enough. It’s certainly possible that people who were canned for performance reasons are trying to spin their departures as “layoffs.” The rumors may be coming from a group of disgruntled, soon-to-be-former associates, trying to maximize their chances of landing new jobs.
But there’s some additional interesting gossip we’re hearing. Word on the street is that K&E, in order to deal with the “problem” of escalating associate salaries, is incorporating an hours component into what had heretofore been a pure “merits” rating for determining who is top of class, above class, with class, and below class.
This is a departure from past practice, in which the “merits” rating was viewed as independent of hours. The “merits” rating, when combined with the separate hours component, would then determine an associate’s bonus. Under the new regime, hours effectively get “double-counted” in the bonus calculation: they’re considered once for “merits” purposes and class rank, and again for bonus purposes. Another K&E source opines:

The upshot is that mediocre associates with big hours are rated higher then stellar associates with lower hours, for purposes of class rank (not just bonus). This may seem perfectly fine, but it does detract from the notion that K&E pushes, that it is a meriotocracy above all else.

What do we think? K&E isn’t engaging in quintessential layoffs — widespread, large-scale, business-driven employee dismissals — but perhaps they are doing selective “soft layoffs” or “stealth layoffs.”
Thus, these “layoffs” may be in the eye of the beholder. To the affected associates, they look like “layoffs” (and have the same consequences). But to the firm, they’re just “performance-based dismissals.”
Could the standards used at K&E for evaluating associate performance have been adjusted upward lately? Quite possibly. But that doesn’t make them “layoffs,” at least not in the strict sense of the word (hence our calling them “soft layoffs” or “stealth layoffs”).
If you can shed more light on what’s going on at K&E, please email us. Thanks.
Update: A rebuttal to the rumors of layoffs, soft or otherwise, appears here.
Earlier: Nationwide Layoff Watch: Kirkland & Ellis (Chicago)

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