Layoffs: What Partners Think
Leigh Jones of the National Law Journal was able to get partners to open up about the reason behind Biglaw layoffs. Not surprisingly, it’s all about the Benjamins:
Law firm leaders and industry consultants say a firm cuts costs by an average of $250,000 for each attorney let go. For each legal assistant or other staffer laid off, a law firm saves about $100,000.
According to the NLJ’s figures, rent and salary accounts for 85% of a firm’s operating budget:
“There’s only so much you can save by pulling the tea and cookies out of the conference room,” said the chairman of a major U.S. law firm that has laid off attorneys during the economic downturn. In order to speak candidly about his firm’s finances, he requested anonymity for this story. “The rent you’re stuck with, so you’re left with this huge megillah of compensation,” he said.
We have explored the concept of forced attrition in this space before. According to at least one partner, that is precisely what is happening.
Details after the jump.
The partner that the NLJ spoke with was able to find some “comfort” from all of the layoffs:
Because associates are clinging to their positions as the economy declines, law firms are finding it necessary to replicate the attrition they’ve come to expect, he explained. “We have an entire machine built around 25% attrition,” the firm chairman said. “We have to engineer that just to stand still. The only comfort one can find in this is that you get the attrition you want.”
Whatever you can save by cutting junior people, consultants are telling firms that firing senior attorneys should also be considered when cutting expenses:
“If you think about saving money, culling associates is really not the big game. It’s the easy game,” he said. [Law firm consultant Friedrich Blase] added that, under his scenario, a mere 3% savings requires a firm to lay off 10% of its associates.The tougher choice is to make cuts at the nonequity and senior counsel levels, he said. Not only are those attorneys typically very expensive for law firms during slow times, but some of those lawyers, out of desperation, hoard work from the attorneys below them, he said.
It’s all pretty sad, and all pretty true.
Just how much do law firm layoffs save? A lot. [National Law Journal]
Earlier: In This Market: Are You Getting Laid Off or Fired? A Kaye Scholer Case Study
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Comments
Oohrah
Second???
I am offended. Please moderate. (Remember to be professional!)
noogie time.
noogie time.
#4 = racist semite
How does one "horde" work?
How many platoons in a horde?
The ship be sinking...
7 - if you are just posting because of the typo then you need to get a life. if you really don't know how one can "hoard" work, well for example in litigation, a non-equity partner or senior associate doing research or doc review that would typically get passed down to a first or second year associate is hoarding work.
@10 - getting upset at random posts? Looks like someone's not getting enough work...
- 7
#6 needs a friend
10, I think 7 was referring to how female lawyers "whored" their work during difficult economic times. Please illustrate and provide lucid, meaningful examples for us.
Thanks.
I <8 you, Johnnycakes!
How about some of these partners take a little pay cut and save ppl their jobs?? Oh wait, this is BigLaw we're talkin about
10 here - I have too much work that's why I am getting upset at stupid posts wasting my time. I know, I know... I should not be on ATL and don't have to read comments, but one can only do doc review for so long without needing a break.
10: Do you know what a 'typo' is? Clearly not. A typo is where you accidentally omit or press one or more wrong keys when typing a word. Posting 'horde' instead of its proper homonym 'hoard' is not a typo; it's a demonstrated lack of knowledge of English.
typo
noun
a mistake in printed matter resulting from echanical failures of some kind
Job opening:
http://www.daytondailynews.com/n/content/oh/story/news/local/2009/02/06/ddn020609gerren.html
Who the fuck uses the word "megillah" anymore?
Actually, the big game is at the senior partner / equity partner level. At my firm, the most junior equity partner makes 3x what a typical non-equity partner makes, and those at the top of the points scale (non even including bonuses) make 7-9 times what non-equity partners make. We could have avoided all the layoffs in our group if management would just trim down one equity partner (out of many) who doesn't originate more than any of the rest of us.
This is one of the sadder pieces I've read in a while. Between the overt admission that the business model depends on making you miserable and the image of some non-equity guy piling doc review on his desk to save his house...yeah.
Here's a job opening:
http://www.daytondailynews.com/n/content/oh/story/news/local/2009/02/06/ddn020609gerren.html
18 is correct. You all fail. This blog is NOT "printed matter".
Elie has never made a typo on this blog. Get used to the english language.
First!
20, I suspect this dood outed himself by using "megillah."
Wow, a business that relies on 25% attrition for its success. That is ridunculous. No wonder I hate this fucking place.
I think I am gay.
megillah, is that what my Jewish friends kiss whenever they walk into their apartments or into a deli?
The real cost savings of any attorney layoffs, he said, take about nine months to see. "The question is: When do we get to the point that we decide we're ready to do that?," he said, adding, "Mission No. 1 is to preserve the partnership."
Mmmmmmm, sitting on the partner pyramid shaped buttplug feels SO GOOD!
Why is no one talking about equity partner layoffs? They may not be happening at BigLaw NYC firms, but I find that unlikely. It's going on all over Philly and I can't find stories about it. People are scurred.
So should we assume that when a firm lays off first year associates, it's not just the firm trying to replicate what would happen naturally, and that the firm has more serious problems?
13 -
When I was a summer associate at a big firm, one of the nonequity partners, who was smokin hot and had tits you could sense coming from down the hall, had us all doing hours of doc review for one of her cases. Since we couldn't all bill the file for it, she offered to "take care" of us one way or another. She called some of us into her office late one night and let us gang bang her right there on her desk. Thus, she "whored" her work out to us.
First?
34 - You forgot "Dear Penthouse... I never thought it would happen to me."
32 - what firms are doing this?
The partners in this post act like associates are just a drain on a firm. Associates are a major source of revenue! That's what all that billing is about, in case no one had guessed. It's not like associates just sit around and collect salaries for being so pretty or pedigreed or whatnot. So maybe they don't bill up to expectations for a while. Maybe the firm doesn't turn a profit on a guy (or gal), but that doesn't make them necessarily just a cost to the firm. The firm could still break even. A firm also invests in its future by investing in its associates. Even if associates are off doing tons of pro bono, that adds to the firm's esteem and will pay dividends when the market comes back. How about a little more ballyhoo for what associates contribute, rather than the nonsense in these comments?
Partners: thanks for being awful at running a business, loading up on real estate and structured finance in an upmarket and throwing the workers you made millions off of a few years ago out with the trash later on. Great job.
The amount of time 10 can do doc review without a break is apparently 12 minutes. 10 is layoff material.
#38--non-billing associates are a drain. With salary and benefits, most are a 300k liability. If an associate is not billing, just get rid him or her, and as many as you can, until you're in the black. Then when the economy turns around, just hire a bunch of GULCers. Problem Solved!
I definitely am. But I am closeted.
Magilla Gorilla is the main character from The Magilla Gorilla Show, an animated series produced by Hanna-Barbera between 1964 and 1967. Like many of the Hanna-Barbera animal characters, Magilla was dressed in human accessories, sporting a small hat and a bow tie.
22= poetically terse and cogent.
That consultant is right. The big cost savings will come from firing non-equity partners and all those in the "counsel" category. The new model will be "up or out." You either bring in profitable business or look like you will be in positition to bring in profitable business or you go. I think the associate cuts will soon stop and the partner/counsel cuts will soon begin.
Behold! A car for GULCs....
http://www.mercedes-glk.com/
My life is a Ponzi scheme.
Hello, dear associates, non-equity partners, senior counsel and other irrelevant staff.
I hereby inform you that I will be reducing your ranks by 10% in order to get my partnership distribution up by 1%. Thank you very much. If you have any questions, please contact our HR department in NYC. Best of luck to you all talented individuals, legal buddies and dearest colleagues of mine.
-BigBro
#34, WHAT FIRM?!
Left unsaid in the article: partners have failed to generate business or diversify the firms' practice areas. A mid-level costs 300k, but if you give them 2000 hours they generate a million. The problem is not attrition (One big law partner told us head count was up at the firm. It was exactly the same as it was two years ago when they were giving out huge bonuses and salary increases). The problem is partners suck at generating business unless it is dropped in their laps. When they lose business they fire associates. If they are jerks they fire associates and tell the associates it is because the associates are bad lawyers. The truth is that partners are terrible businessmen. Only worse than partners are law firm consultants telling them to keep billing at $1000/hr instead of realizing the economy is tanking and they might want to protect their client base.
How do you know when you are gay?
The senior attorneys I know don't "hoard" work. What I do see are beta-male attorneys sitting in their office WAITING for work to come to them when they should be GO-getters. LOL LAZIES !!!!!!!!!!!!!!!!!
50, I'm not trying to be mean, but the attrition point is that firms design their hiring practices based upon a relatively high level of attrition. They need people to leave and people aren't leaving because of the current economic and employment environment. Your point about headcount is a negative during a down economy, not a plus for the firm.
All hail Captain WorkHard. Listen and learn. That applies to woman woo, although you can be beta around me, or alpha, whichever you prefer honey
48 - LOL. Stop cutting and pasting from firm memoranda.
you know when you post a comment here there is a little advertisement to the right side of the page showing this chick who lost 25 pounds of stomach fat (and half her neck). it just struck me as ironic because she looks a lot better without all that weight, kinda like my firm looks better without all the extra weight
Other groundbreaking revelations mentioned by the partners interviewed:
- "Cake is yummy."
- Betting on the Steelers in the Super Bowl with such a huge point spread was a "bad idea"
- "Puppies are cute"
- "These computer things are useful."