Earlier this month, rumors about possible layoffs at Latham & Watkins were making the rounds. We alluded to them briefly here (also noting the firm’s denial).
We continue to get asked about this gossip, though, so we’ve done a little poking around. Sources at LW report that layoff rumors have been circulating, but that they aren’t true — at least not yet. From one source:
The LW layoff rumors are untrue as far as I know. Nobody I know has been laid off. [But] things are very slow, and they have 50+ summers still to come [on board as permanent associates]. I think this is confined to New York, though; the rest of the offices seem plenty busy.
That’s consistent with what we’ve been hearing: no layoffs, but lots of slowness. Another LW source reports that the firm’s Washington office is “on pace” for everyone to hit 1900 hours, that Los Angeles is at about 95 percent, and that New York is “sucking wind” at 90 percent.
Internally, here’s how the firm has been dealing with the gossip:
We got a few days of nervous jokes about how layoffs weren’t imminent: “We’ll wait until Christmas…” Then we got an unequivocal denial at Latham’s First Year Academy this past weekend.
More discussion, including a guess as to the genesis of this gossip, after the jump.
So where exactly did these rumors get started? They seemed to surface near the start of this month, when Chairman and Managing Partner Robert Dell sent a strange “let’s maintain our firm culture” email to all Latham employees. We haven’t been able to get our hands on the cryptic Bob Dell memo, but one LW source hazarded a guess as to its meaning:
Pure speculation. They say that culture = superb performance. People “underperform,” so they give them no bonus and get rid of them. It’s not layoffs; rather, they are getting rid of people because they don’t match the firm’s “culture.”
This essentially raises the same question as yesterday’s Kirkland & Ellis post: What exactly is the difference between “associate layoffs” and “associate reviews of greatly intensified scrutiny,” in which higher review standards result in more people being asked to leave?
And to play devil’s (or Biglaw partners’) advocate: What’s so wrong with that? A job as an associate at a large law firm is not a sinecure. Why shouldn’t people who meet the firm’s standards be asked to leave?
And if those standards happen to get jacked up from time to time, because the economy is looking shaky or business is slow for the firm, is that so wrong? In other fields — including rather lucrative ones, like investment banking — highly paid professionals get laid off with regularity. Why should law be immune to the forces of economic reality?
(One response: there is the issue of notice, and whether associates are given warning about weak performance and the opportunity to cure any alleged defects. We’ve been hearing from a number of K&E sources who identify notice as the problem with what’s going on at the firm right now. We’ll be writing about that soon.)
If you hear any layoff scuttlebutt, at Latham or at any other Biglaw shop, please email us (subject line: “Nationwide Layoff Watch”). Thanks.
Update / Correction: More about this story, including a correction to some of the discussion of hours, over here.
Earlier: Nationwide Layoff Watch: Kirkland & Ellis (Chicago)