Associate Life Survey: How Would You Manage the Slowdown?
We received about 900 responses to last week’s ATL / Lateral Link survey on how much severance and notice your firms have been giving laid off associates, and how the firms should be handling the slowdown.
Overall, only about a third of respondents thought that their firms were handling the slowdown well, but about the same number thought their firms were handling the slowdown poorly. The rest thought their firms were just doing “so-so.”
When asked how firms should handle the slowdown, associates responded with a pretty consistent line of thinking:
BETTER
Some respondents were actually in favor of layoffs — as long as it didn’t affect them:
Firing dead weight.
Get rid of non-profitable partners before cutting associates
Cutting under performing attorneys.
cut senior associates who milk hours and part timers
They should have eliminated worthless associates ages ago before they drained us dry. They should also not maintain so much vacant real estate.
Cutting the inflated ranks of secretarial and paralegal staff and eliminating retreats and other unnecessaries. But do not freeze associate salaries!
Ah, colleagues.
More after the jump.
Others hate summer associates:
They “should” stop flushing 30k per summer on “maybes.” Summer associate positions are coddling for kids and it doesn’t make any economic sense in this economy to give them other starving junior associates’ work so those associates get fired, and pay them anywhere near as much as they get paid. Their work product is practically malpractice most of the time.
Many suggested changing their compensation structures, perhaps in tandem with shifts in billing practices or even the practice itself:
Abolish the billable hour and lockstep compensation
Freezing salaries and/or going back to pre-boom salaries rather than laying off people.
Reduce salaries, reduce billable hours expectations, let associates go part-time, take a longer view. Most importantly be honest about layoffs.
Freezing salaries maybe. Offering reassignment to associates (many associates would jump at the chance to get out of their slow group).
Others, however, would prefer to focus on partner compensation:
My firm has been laying off slowly in every department however, last Tuesday was a massacre. The problem I have is that the firm is not doing badly. It is just trying to make sure that the greedy partners don’t have to take a cut!
Partners should take pay cuts
partners giving up a bigger share of their greedy pie.
Everybody (including partners) should take take a paycut, instead of indiscriminately laying off associates to preserve the partners’ bottom line
Of course, wikipedia suggests a potential flaw with this approach:
It’s common to have provisions in law firms’ loan documentation that say if a certain number of partners leave the firm it could put the loan into default or turn the spigot off altogether. This could ultimately drive a firm into liquidation.
Overwhelmingly, the biggest issue associates wanted to talk about was actually … talking about the issues:
Honesty.
Be honest.
More information
Be honest and open with associates.
Give us notice when layoffs are happening.
Publicly admit layoffs.
I don’t know. But updating me on what they are doing would be nice.
Being transparent with information. Shedding excess capacity proactively and then providing assurances to those that survive.
More openness. Nobody knows what is going on.
Provide a plan to associates and staff. If layoffs are a potential part of that plan, allow people enough time to explore other job options. When layoffs occur, issue a press release stating that the firings are for economic reasons so that the newly-unemployed have less of a cloud over their head.
be honest and admit it is because of the economy rather than insist that it’s performance.
Being honest about layoffs—stealth layoffs are bad form and do nothing but cause resent and burnt bridges.
Openly announcing layoffs and holding regular meetings to discuss work slowdown issues caused by the economic downturn.
Be honest with its employees about those attorneys and staff members laid off. Telling people that there are no lay offs is unacceptable.
Be as up-front with employees as possible. I’m personally sick of hearing that we are strong and no lay-offs are coming. When the fact is that they have been conducting stealth lay-offs for months
They need to be honest, comments like “we are not doing ANY layoffs right now”, when every day both attorneys and secretaries are “disappearing” is horrible!!!
being upfront and honest. talk about their business how they are leveraged, what risks they face, what they are thinking about. open up to associates for suggestions (filtered through team leaders). make associates feel like they are all in it together, rather than waiting to read on ABL what is happening to their firm.
Be F*cking honest!
Be honest. If it’s a question of keeping up your PPP to keep your guys around, just tell the associates being shit-canned: “look, I like my extra money more than I like you.” It will be refreshingly honest and I think people will leave on better terms.
Relative transparency, honesty and assistance.
While associates overwhelmingly favored open communications regarding layoffs, they varied quite a bit on how the layoff victims themselves should be treated:
LOTS of notice to fired associates and LOTS of severance
depends on the economy, nowerdays 6 months
3 months notice, with severance after the notice period has expired. Screw it…how about don’t lay people off and cut into those PPP a little?
Firms should provide 1 month of notice so that matters can be transitioned. The severance period should not be used for this. In this job market associates need as much time to look for jobs as possible.
There either should be more advance notice of the lay-offs with short severance or longer severance if there is no notice.
As much as possible; at least 2 weeks, but 1 month is better
Enough time to transition cases to new attorneys assigned to them but no more than 1 month
I think a two week notice is what is expected of associates, and as such, it should be expected of the firm. If not more notice.
More liquor would be nice. Also, I would like to see windows that open.
Overall, most respondents thought their firms should give at least a month of notice when terminating an associate. A quarter thought that three months would be best, while about ten percent called for six months. Almost a quarter of respondents, however, thought that a firm should only give two weeks or less.
Roughly half of respondents also thought their firms should provide associates with three months of severance, and another 30% said six months would be the best choice. About 15% of respondents, however, thought that severance should vary based on seniority.
In practice, however, layoffs have actually been pretty sudden for most of the victims: about 55% of respondents said that their firms provided two weeks notice or less before ushering associates out the door.
At firms providing more notice, three months appears to be “market.” About 20% of respondents reported a three-month notice period at their firms, with another ten percent reporting a two month notice period, and roughly five percent reporting four to six weeks notice. Only a handful of respondents, however, said that their firms gave associates six months of notice.
On the severance front, about 15% of respondents said that their firms provide either two weeks severance or none at all. As with notice, however, three months appears to be market for severance, with slightly more than half of respondents reporting that their firms provided that much support. Another 20% reported severance payouts of only one or two months. But only two percent said that their firms offered six months severance.
—
Justin Bernold is a Director at Lateral Link, the sponsor of this survey.
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Comments
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FOIST!
Huge opportunity here for firms to dump the billable hour, introduce flat-fee or contingency type billing (on the defense side) and pay merit-based compensation.
Getting rid of summer associate programs reeks of hypocrisy, especially since 99.9% of the complainers got their starts as summer associates themselves.
Banks routinely restructure loan terms. If a firm's management went to its lender and showed them that jettisoning dead weight partners was prudent, the lender would authorize the action or waive a covenant, were it necessary.
3: Just because we enjoyed the boondoggle doesn't mean it isn't a boondoggle. P.S. I enjoyed it as an associate, too. A lot. Doesn't mean it's "hypocracy" to discuss whether it's a good use of money in this economy,.
Sorry you are going to be having a lousy summer, 3.
Give attorneys the option to work as lower paid staff attorneys.
Give attorneys option to take pre-boom salaries.
Stop hiring 1000 summer associates.
Start 1st years after Jan 1, 2010 or force them to clerk for a year. Why fire a 3rd year who actually knows something and only costs marginally more than a 1st?
3 = foolish law student. So what if the "complainers" used to be summer associates? The economy is what it is, we all have to deal with this new reality, and we already put in our time.
Keep summer associates but only hire rising 3L's. Hiring people after their 1L year is moronic. Few, if any, actually go back to the firm from their 1L summer and 1L's haven't taken corporations, evidence, securities, etc.
Don't make anyone a partner this year. Ask associates in groups that are slower if they can switch to areas that the firm is busy in. Obviously, this works better for first and second years than mid-levels.
pay each associate $75 per hour billed and paid. no bonuses.
Firms should not throw out the SA program. For every third year who knows something is another 3rd year who should never be working there in the first place.
Out with the old, in with the new...
It is absolutely hypocritical to argue that firms should get rid of summer associate programs after having been through one.
It is par for the course though. Look at all the partners that loathe any form of "associate training" when they were mentored as junior attorneys.
Oh 4. it is very true that banks don't have a problem restructuring the loan when a firm has jettisoned poor performing partners. The problem is, that what was being discussed in that section was cutting compensation for all partners, not getting rid of dead weight partners. No bank is going to restructure loans to a firm that is losing good partners because it has cut their distributions in order to continue coddling its associates.
3- It's not hypocrisy. No one owes you anything, let alone a summer where they spend $90,000 on you. You may be smart, but there are literally thousands of smart law students who will have to scratch and claw just to get a summer interview in this economy, let alone a permanent offer. I honestly sympathize with those entering the job market in such rough times, but let's keep it in perspective. You didn't go to law school just to be a summer associate, and you aren't owed anything.
Lavish summers may be a great recruiting tool, but no one has a "right" to one.
The best way to overcome this economic downturn is to stop letting the inexperienced court jester think that he can sit on the White House throne and rule the kingdom.
Firms should get rid of SA programs. I worked hard during my SA experience. Did I learn anything of value vis a vis the law? No. Instead, I learned:
1. That partners give assignments with unrealistic deadlines. Working weekends as a summer was essential and expected.
2. That associates were treated like crap and were underpaid relative to market rates but were expected to bill more than the market average.
3. That I had to work for free for a week after my SA program ended because of the unrealistic deadlines mentioned in #1.
4. That I should have an escape plan.
I accepted my offer and left the firm a year and a half later for better pastures. I feel that the SA program and my general experience at that firm was not very valuable in terms of molding me into a better lawyer. So I think SA programs can and should be cut.
11 - firms have been doing that for years, it's called the poor performance review or the "you're not on partnership track" talk.
It makes no sense for a firm in these times to spend tens of thousands on an unknown summer when they can spend the money on covering the costs of already proven associates who bill under 1800 hours that year because the practice is slow.
Definitely cut down the summer program. It's a lavish show of strength in good times; a costly boondoggle in bad times. We all went through it, but different times call for different measures. I would've loved to get the bonus that senior associates received in 2007; alas, they were seniors at the right time and I was a junior. So it goes.
Keep the summer associate program, but just have one big summer event (no need for 2-3 events a week, like my law firm had this past summer). Also, don't do the $60 per person for lunch EVERY SINGLE day.
11: Huh?
I am offended by 11. Please remove.
Fort Worth attorney
Hey, 12
Hypocrsisy: 1: a feigning to be what one is not or to believe what one does not ; especially : the false assumption of an appearance of virtue or religion
Hope that helps!
Anyone think firms will rescind offers to incoming first year associates, or is that muito drastico?
23, yes. Or push back start dates so far they might as well have. Or dissolve before you get there.
Baker Botts and Locke Lord both are contemplating rescinding offers to 1st year associates.
Scary times.
Shouldn't the lolcat have difficulties spelling "liabilities"?
12 = wannabe summer associate = nervous 2L
23, I think that's already happening.
Didn't some firms rescind offers for their Charlotte offices last year? Sonnenschein, I think, or maybe Cadwalader.
The lolcat is reading 'liabilities' off the folder.
You know we're totally screwed if people have enough time to proofread the lolcat captions.
NY to 190K layoffs!
In an effort to cut costs, Paul Hastings announced that it will no longer push female associates down the stairs. Instead, the female associates will have to throw themselves down the stairs.
I heart lolcats.
Paul Hastings issued bonuses today in the form of stem cells.
sWaSS sHLobster
BILLY MAYS here, telling you that I would manage the slodown with a late night commercial blitz for legal services for the low price of $763/hr + S&H
Summer associates are totally useless. Let us be honest, most first years are useless unless you are going to devote them almost exclusively to document review. Moreover, in my experience, firms typically cut most summer associate time because they know that it is devoid of value.
Some firms have caught on to the fact that summer associates have no clue what they are doing and won't for some time. Why not let junior associates get trained at another firm, at that other firm's expense and then cherry pick the best and the brightest (who have already proven themselves) on the lateral market? A good example of a firm that has done will using this practice is Grippo and Elden in Chicago. Clients know that their money isnt being wasted on junior attorneys with no idea what they are doing and can assume that their counsel is providing at least some value for "services rendered."
Especially in this economy I have to think firms will reevaluate summer programs.
35, the last sentence of your post is the only relevant one.
Your general ire about summer programs past is off base. Of course 99.98% of SA work is useless. Giving SAs "quality work" was a recruiting tool, like the wining and dining, when ever-expanding firms were competing for a constant pool of top-tier law students. Now that that's no longer the case, I expect we'll see some changes in summer programs. (But most law firms will be too risk adverse to do anything too drastic.) Point being, SA programs were never about getting billable value for the salary. Oddly ignorant or obtuse to rant otherwise.
As for your second paragraph, what's the point? Who are you advocaring to? That's obviously not an industrywide proposal (the attorneys need to get trained somewhere), and ignores the raw-labor needs of many practice areas. Many firms midlevel ranks are already populated this way even though they hired ranks of first years, too, most of which find their way out of the firm by midlevel. So what's your point? (And do you work at Grippo and Elden?)
So thanks for the comment that was on par with typical SA work.
Gusty question, Justin. You're a shark.
Gutsy question, Justin. You're a shark.
Gutsy question, Justin. You're a shark.
If you ask me, the summer associate program is more valuable to the firm right now than first year associates.* Right now, there is not enough work to flow down the pipeline. Right now, there is hope that in the not too distant future things will turn around. Why shouldn't firms be investing in those who will come in when work picks up instead of paying junior associates to sit on ATL whining about layoffs? It would appear that these summers are a better investment.
Furthermore, firms should be cutting support staff salaries. Though this may not reduce expenses by as much as cutting associates, there is no reason two 25 year old associates should have a $60k per year secretary.
Next, firms should maintain honest communication with employees. Employee efficiency appears to be reduced when they are uncertain as to their employer's needs. Maintaining communication and perhaps finding alternatives could be beneficial.
I also think firms should offer a reduced compensation track in tough times instead of layoffs. Similar to severance packages in the car industry, firms could offer incentive to not cost as much to the firm yet build experience. For example, a firm could pay junior associates $60k a year to work eight or nine hour days and work primarily on pro bono matters. Such behavior would promote the firm's pro bono practice, reduce costs to the firm, and allow juniors the opportunity to get substantive experience that the firm could take advantage of when workload picks up at which point the firm could place these associates back on the 160k track and increase hours. This, again, speaks to junior associate salaries being investments in future moneymakers.
I am all for firms cutting dead weight; however, I am not convinced it is clear until year three or four whether an associate is dead weight. If it is clear sooner, by all means cut. But, I'd be interested to know how often it is so clear so early.
Finally, don't lie. Earlier I mentioned transparency. Many associates have expressed frustration on these boards because PPP is barely touched by layoffs and reduced bonuses have been common place. Presumably, these layoffs are not related to 2008 profits, but instead are related to expected business. Partners bring in the money and should be able to keep more of it. Explaining that business in is not expected to be as good as in years past would help explain the cuts without turning attention to steady revenue and profits.
*I am not going to be a summer associate this coming summer
One of the more interesting aspects of the whole slowdown and layoff phenomenon is watching associates happily accept layoffs and payfreezes, while secretaries continue to get raises, 100K a year packages, true 401(k) matching etc. All for perhaps answering the phone and running a few changes to a document now and then. It is truly fascinating.
One of the more interesting aspects of the whole slowdown and layoff phenomenon is watching associates happily accept layoffs and payfreezes, while secretaries continue to get raises, 100K a year packages, true 401(k) matching etc. All for perhaps answering the phone and running a few changes to a document now and then. It is truly fascinating.