Welcome to BACK TO THE FUTURE. In this occasional ATL feature, we’ll step into a time machine and take a look at what the legal profession looked like at some point in the past.
In a post about staff layoffs at Fried Frank, a commenter drew our attention to this fascinating 1990 article from the New York Times. It seems that the commenter was trying to challenge the recent claim by firm chair Valerie Ford Jacob that the firm has never laid off attorneys. The NYT piece — by David Margolick, former national legal correspondent for the Times, now at Portfolio (and also one of Kash’s journalism professors at NYU) — mentions Fried Frank as a firm that may have engaged in “stealth layoffs.”
Margolick’s article doesn’t use the term “stealth layoffs,” but the phenomenon it describes is essentially identical to what we’ve been reporting in the pages of ATL lately. The article begins:
They were the legal profession’s gilded generation, an army of lawyers without limits. As law students, they were wined and dined and wooed by the most prestigious law firms in New York. Once hired, they began settling into a frantic but fantastically lucrative life. It was a life of glamour, prestige and, they assumed, stability.
Now, only a few years later, dozens of these lawyers have had a crash course in the realities of modern Wall Street practice. For the first time in their lives – lives of success atop success – they find themselves in an unusual position. They have been fired.
As the sour corporate climate reaches large law firms in New York and to a lesser degree cities like Los Angeles and Chicago, a bubble has burst. With business down, particularly in corporate work, real estate, and mergers and acquisitions, several of the most famous law firms have dismissed substantial numbers of lawyers, particularly those in the early years of their careers.
This article could have been written yesterday. But it was actually written over 18 years ago; the dateline is August 12, 1990. The more things change, the more they stay the same.
More excerpts and discussion — including a brief comment from Margolick, plus information about what junior associates earned back in 1990 — after the jump.
More from Margolick:
The ax fell disproportionately on women – a reflection of their continuing marginal status at some firms, despite record raw numbers. In others, it fell on those brought in laterally from other firms rather than home-grown products. In still more, it fell more capriciously – on those who had the wrong mentor, an absentee mentor, or no mentor at all.
Were women disproportionately hit in the latest round of layoffs? It’s tough to tell. But it’s worth noting that one of the more high-profile legal layoff victims was a woman: holla at your girl, Shinyung Oh.
On the spectrum of hardship cases, the plight of 25-year-olds making $85,000 a year, most with skills more than sufficient to find work elsewhere, is admittedly not the saddest. There is no constitutional right to foreign cars or second mortgages. But many still carry large debts from law school. Moreover, there is the shock of dismissals in a world unfamiliar with them, as well as what the lawyers involved contend is the disingenuous way in which they were handled.
The foregoing paragraph also could have been written yesterday (or today) — except that in 2008, the numbers are much bigger. Since 1990, starting salaries have almost doubled, to $160,000. But law school loan burdens have also increased.
Update: That approximate doubling is in nominal dollars. If you want to talk about inflation, check out some of the comments.
More on the “disingenuous way” in which layoffs were handled:
The firms involved do not deny that many of their lawyers have been asked to leave. But they have proven more willing to let go of lawyers than of the myth of gentility they have long cherished. Straining to preserve what remains of that image, they insist the dismissals are based on merit rather than on reduced earnings.
A representative comment came earlier this year from Roger Meltzer, a partner at Cahill Gordon and the firm’s spokesman. ”The quote, layoffs, were not related to any financial problems at the firm; they were related strictly to the merits,” he told Manhattan Lawyer magazine, a trade publication.
Ah yes, the invocation of performance-based dismissals. Sound familiar?
(Digression: Anyone know what happened to “Manhattan Lawyer” magazine? It doesn’t ring a bell for us.)
The layoffs have left many of the young lawyers feeling betrayed by institutions which, they charge, courted them, exploited their loyalty, and worked them incessantly, only to dump them when times got tough and to blame them for poor performances. That, in turn, leaves some feeling chagrined over their own naivete.
”A lot of young people think they can go to a good law school and get a degree which will guarantee them stability and interesting work for the rest of their lives,” said Lesley M. Friedman of Special Counsel Inc., a legal temporary service which has helped place some of the dismissed lawyers.
One of the more than 20 lawyers dismissed this year by Fried, Frank, Harris, Shriver & Jacobson agreed. ”Maybe I was deceiving myself,” he said. ”They’d always portrayed themselves as something other than the factory I guess they are.”
”I feel like an idiot, I really do,” said another lawyer, one of 10 dismissed by Rosenman & Colin. ”When it comes down to money they’ll just turn around and stab you in the back. Everyone is saying I’ll get over it, but it’s something I don’t think I’ll ever get over. I really felt that I was a good lawyer.”
Just as they do today, the firms and the fired lawyers dispute the departures:
Merit was the only issue, contended Arthur Fleischer Jr. of Fried Frank.
”People who are not functioning as their peers are, are told that it doesn’t make a lot of sense for them to stay here,” he said. ”That goes back to time immemorial.” He dismissed as nonsense the suggestion that anyone had been dismissed for economic reasons.
”I know most of the people who were let go, and most of them got great reviews,” one recently dismissed Fried Frank lawyer countered. ”Don’t give me this garbage that they were scum.”
”Even though they’re fooling no one, it’s easier to say ‘These people weren’t cutting the mustard’ than to say ‘We’re not cutting the mustard,’ ” an associate dismissed by Shea & Gould said.
Cf. Shinyung Oh, laid off by Paul Hastings, who wrote in her famous farewell email: “What I do not understand is the attempt to blame the associate for not bringing in the business that should have been brought in by each of you [the partnership]….”
In addition to Fried Frank and Roseman & Colin (now part of Katten Muchin), the firms that get shout-outs in the NYT article for laying off lawyers back in 1990 include Cahill Gordon, Milbank Tweed, Willkie Farr, and Shea & Gould (which no longer exists — so maybe the layoff victims got the last laugh).
But at least Willkie gets props for being honest back then:
[O]ne managing partner, Robert Hodes of Willkie, Farr & Gallagher, acknowledged that some of those discharged at his firm were for economic reasons, and that they understood that this was so. ”There was no way not to be candid,” he said. ”These are very smart people.”
We’ve given you mere excerpts from a longer, and fantastic, article. Take a trip down memory lane and read the entire piece by clicking here.
After an introduction by ATL associate editor Kashmir Hill, who is now one of his students at NYU’s journalism school, we reached out to David Margolick, author of the original 1990 article. We wanted to see if he had any comment on his piece in light of recent developments in the legal profession, including the return of stealth layoffs. He replied, by email:
I don’t have any great profundities for you. I’ve lost touch with that scene and, in fact, wasn’t even aware of any ‘meltdown.’ That old clubby world was starting to break down back in my era, and it was one of the themes in my work, but it basically remained intact. It just seems inevitable that another another, more fundamental restructuring was in the offing.
Perhaps that more fundamental change will come about in the next few years, if the world of Wall Street undergoes deeper change that spills over into the legal sphere. But only time will tell.
Wooed, Wined and Overworked, Wall St. Lawyers Meet Pink Slips [New York Times]