Law Shucks, Layoffs

This Week in Layoffs: 04.25.09

Law Shucks layoffs layoff tracker.jpg[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.]

First time jobless claims ticked back up again last week, up 27,000 to 640,000, continuing the 12-week run of record number of people staying on unemployment. There was a net increase of 93,000 in the overall number of people collecting benefits, at a total of 6.14 million. From the “ray of hope” department, the rolling four-week average, which is less volatile, dropped slightly to 646,750 from 651,000 first-time applicants.

“There is nothing suggesting at this point that payroll declines are going to abate,” said Tom Porcelli, a senior economist at Castlestone Management Ltd. in New York. “We could bounce along the bottom here for a while.”

That may be true in the broader markets, but in BigLaw there is one factor looming on the horizon that could stanch the bleeding. What is it? After the jump.

The Wall Street Journal reports

A new Hewitt Associates survey of 518 large U.S. companies found that 54% believe the economic upturn will begin at the end of 2009 or early 2010. Nonetheless, a large percentage have plans for further layoffs, salary reductions, medical-benefit cuts and changes in 401(k) matches.

Hewitt’s survey found, for example, that 25% of companies are considering layoffs in the near future. Similarly, a survey conducted by the Society for Human Resource Management of 467 members found that 24% were very likely to implement layoffs over the next six months.

But when law firms (most of which aren’t going to be winning any HBS awards for their management skills) are making layoff decisions, the P&L is just one part of the equation. Another, equally important factor is the firm’s reputation (yes, we know that ultimately affects P&L as well, but it’s generally considered as a discrete topic). Firms are obsessed with how they are perceived by law students, so we expect that there will be fewer layoffs as students’ arrivals for summer programs near.

In addition to not wanting layoffs to happen in front of the summers, firms seem to be realizing that there are less-controversial methods of reducing costs. According to a Work + Life Fit survey, 94% of respondents (757 individuals who were employed full time at the end of March) would be willing to accept a change or reduction in their schedule, or take a pay cut, to avoid layoffs. Those are all methods that have become significantly more common at law firms recently.

CEOs may not be listening, though. According to USA Today, CEOs of 71 of the 100 largest companies expect job cuts in the next six months. That will likely have three effects on lawyers: some inhouse counsel will be affected directly; the perception that law firms can lay people off without taking a reputation hit will increase; and demand for legal services may further decline, continuing the shame spiral.

We may not see BigLaw associates take to the streets like some Broward County public lawyers and staffers did, but you never know – maybe if Building a Better Legal Profession have their way…

What did happen at firms this week?


This week continues the trend of moderate layoff activity, although there were almost 60% more people fired from major firms this week as compared to last, although only five top law firms had layoffs, compared to last week’s six.

Schulte continues its efforts to keep layoffs under the radar, but ATL has confirmed the firm fired 20 more associates, although some were told it was performance-based and others due to the economy. We’re still trying to figure out a way to recap New York as a market, but so far it’s proven just too daunting.


Our good fortune in local reporters’ covering their regions continues. Last week, we covered Atlanta with the help of the Fulton County Daily Report. This week, Gina Passarella at the Legal Intelligencer did yeoman’s work rounding up all of Philly’s layoffs.

She also reports that Schnader Harrison laid off 3 partners, 5 associates and “up to” 10 staff (see our methodology).

Again, we’re not particularly familiar with Philly, so to our NY-centric eye (and with the help of Wikipedia) that leaves Fox Rothschild and Pepper Hamilton as the only Philadelphia firms without layoffs.


We summarized Chicago a month ago, and at the time Locke Lord and Winston & Strawn were the last two firms standing. Locke Lord didn’t last long, announcing deep cuts a week later just to spite us. Kirkland is generally considered the premier Chicago firm (at least by those of us from NY), but this week it added 80 staff to the 25 lawyers it cut in January.


No summary would be complete without London firms “entering into redundancy consultations” with people. Clifford Chance is looking to get rid of 20 more staff and Herbert Smith is going for 33 attorneys and 51 staff. Going back to March 1, 2008, Clifford Chance has now had TEN separate layoff announcements. No other firm has had more than five. At 401, CC is creeping closer to catching Latham & Watkins (440) for #3 on the list.

For the rest of This Week in Layoffs, head over to Law Shucks, where we cover deferrals, salary cuts, and provide the final numbers for the week. We also reorganized the Layoff Tracker so it should load faster, and added a few new charts (including the tally of firms by rounds of layoffs, which provided the CC count).

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