Layoffs, Money, Partner Profits, Skaddenfreude

Open Thread: Blame The Associates

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Earlier today, the American Lawyer published a report detailing declining profit margins in the legal industry.
It is nice to see that somebody commissioned an entire report to figure out obvious facts like “the first half of 2008 looks very different from the previous six years” and “[t]he slowdown is hitting the most profitable firms the hardest.” In other breaking news, Britney Spears’s career has hit a bump in the road.
Instead of a simple doom-and-gloom economic report, Am Law columnist (and Biglaw banker) Dan DiPietro offers this proposed solution to all the law firm ills: fire the associates!

“There is a silver lining. A bad year (and the numbers suggest 2008 will be even more trying than 2001, when partner profits were down slightly) will enable firms to take steps that partners would resist in a good year — winnowing out unproductive lawyers and applying greater discipline to expense control.”

Silver lining?
Partners, pundits, and others who like to play McKinsey & Co. on the weekends always suggest this form of fat cutting in tough economic times. But it is a disingenuous solution.
Read why, after the jump.


“Unproductive associate” is a catch-all term that can describe essentially whatever it is they want it to describe. An “inefficient” associate takes 2000 hours to do 1700 hours of work. A “lazy” associate might engage in their own personal “slowdown” the minute they reach their bonus hours. But is either stereotype “unproductive?” Which one?
Maybe an unproductive associate is just a lawyer who has absolutely no control over how much work (s)he is given.
If you need to winnow people out, fine. The pain has to be spread around in times of trouble. But don’t insult people on their way out the door. Just once, wouldn’t you like to read an honest layoff memo?

“Dear Plebeians,

We run a highly successful pyramid scheme. Unfortunately, the economy is tanking. Therefore, the following 50 associates had their names drawn out of a hat, and the results have been certified by PricewaterhouseCoopers. Sorry about this, but some of our unproductive equity partners are having difficulty making it rain.

Respectfully,
The Capstone”

Earlier: Morning Docket: 08.21.08 (passing shout-out; first item)

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