Layoffs

This Week in Layoffs: 04.04.09

By  
on

[Ed. note: Above the Law has teamed up with Law Shucks. Law Shucks has done excellent work translating all of the layoff news into user-friendly charts and graphs: the Layoff Tracker.]

Unemployment hit a 25-year high in February, reaching 8.5%, and the legal industry isn’t immune. Fortunately, April hasn’t gotten off to the roaring start we saw in March, but the major firms continue to cut headcount.

According to the New York Times:

The sharp and continuing increase in unemployment suggests that even if the downward spiral is beginning to level off, job losses are likely to keep piling up for the rest of this year and into 2010.

As the American Lawyer notes, roughly the same number of people are currently employed in the legal sector as were in October 2003 — five years of growth gone in six months. 2,700 jobs were lost in the US legal sector in March alone (note that is a net number, so for that, and a whole host of other reasons, it doesn’t correspond to the 3,677 we tracked as laid off by major firms last month).

The effects on our little corner of the economy are slowly getting mainstream attention. In a New York Times editorial, Adam Cohen notes that lawyers may not be the most-sympathetic victims of the recession (really, can’t we call it a depression yet?), but they are the canaries in the coal mine that could force a change in how the industry works. He’s predicting lower salaries and law-school-curriculum reform.

As of early Friday afternoon, there were a total of 675 layoffs for the week, up 47% from last week’s 459.

Sponsored

Details, analysis, and context, after the jump.


Hogan & Hartson was forced to admit its “voluntary” offer was a flop: of the 250 people to whom voluntary severance was offered, only 28 accepted. As we predicted on Law Shucks, voluntary offers are doomed to fail and will inevitably be followed by layoffs. The firm was forced to cut 93 staff. Hogan also has a unique, tiered compensation model, with associates in some office on a 1,950-hour track and some on 1,800. In a further cost-cutting measure, a number of associates will be forced into the lower-hour/lower-pay tier. We do give the firm credit for its optimism — the voluntary layoffs in February effectively gave staff six additional weeks’ severance — and the firm has been relatively forthcoming about its actions. Hear that, Texas.

In an interesting vote, at least 75% of Clifford Chance partners voted to trim up to 15% of the partnership. That means up to 92 of the firm’s 613 partners at the end of 2008 are at risk. I’d really like to see the actual numbers on this — considering lawyers’ inability to see their own flaws, I wouldn’t be surprised at all if some percentage greater than 85 approved the measure. As the firm starts looking at what particular cuts will be made, Legal Week reports that the firm’s US practice may be particularly at risk.

Over at Mayer Brown, they’re also taking a look at leadership and whether the firm is set up to fail. The firm has laid off 223 people (101 lawyers — good for #10 on the lawyers-only ranking — and 122 staff) in three tranches since November — 135 this week alone (45 attorneys, 90 staff). Despite a nine percent revenue increase, there have been a slew of partner de-equitizations and defections, not to mention suits against the firm. Firm chairman James Holzhauer is stepping down after less than two years on the job, but no successor has been announced. That’s in part due to the operations problems caused by having three heads (there are also two vice chairs) running the firm from two continents.

Other significant layoffs this week include: Reed Smith (100 – 26 lawyers, 74 staff), Locke Lord (135 – 45+90, which leaves Winston & Strawn as the only Chicago firm without announced layoffs), Fried Frank (99 – 41+58), and Stroock (50 – 19+31).

Sponsored

In addition to layoffs, freezing (or cutting) salaries, and reduced schedules, this week we got word of a new cost-cutting opportunity that is being kicked around: office space. According to the ABA Journal, firms are considering putting associates in cube farms, downsizing partner offices, and going to a one-size-fits-all model.

Maybe it’s not all bad. Bitter Lawyer finds reasons to be jealous of the laid-off.

All told, 675 people were laid off from major law firms this week: 212 attorneys, 463 staff. For more coverage and data, head on over to Law Shucks.

Topics