Law Shucks, Layoffs

This Week in Layoffs: 05.25.09

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[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.]

No! So close! We had this whole piece written on the optimistic assumption that this would be the first full week without a layoff since the end of 2008.

Then Ropes & Gray went and ruined it for everyone.

The slowdown of law firm layoffs reflects the trend in the broader economy. Initial jobless claims were down 12,000 for the week ending May 16, to 631,000. Continuing claims increased by 75,000, the net of the 637,000 claims from last week. That was the 16th straight week of a net increase in unemployment, bringing the rate to 8.9%, a 25-year high. The level is expected to peak over 10% in the next year, and take five more years to drop down to 5%.

So even though the grand total for calendar 2008 broke the 10,000 layoff mark last week, the rate has dropped off dramatically. It was only on April 13, 2009 that the total from the current wave (counting from Cadwalader in January, 2008) broke 10,000. Despite the recent slowdown, it took just over a month to have as many people laid off from law firms as were laid off in all of 2008.

Even if Ropes hadn’t rained on all the barbecues, there were still going to be a number of caveats and clarifications to the "no layoffs" analysis. We address those, and other cost-cutting measures, after the jump.

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Layoffs

For those new to the series, we track stealth layoffs just like every other layoff, although our humble opinion puts them in their own special circle of hell.

So Ropes & Gray gives us our first caveat to the "first full week without a layoff" announcement, which is that we don’t give a pass to firms that play the "performance" card. All layoffs in this market are economics-based unless proven otherwise (see, e.g., Deidre Dare or the Quinn Emanuel first year).

Our second caveat would would have been to clarify that "no US firm" had laid anyone off this week. Someone is always being laid off in London.

Addleshaw Goddard, one of the larger UK national firms, went the traditional route and cut 85 staff. But they’re also thinking outside the box. The firm has proposed a 4-day workweek at 85% salary. The firm is soliciting feedback on that and will decide in a few months whether to implement. The firm is also offering four-, eight-, 12-, and 26- week sabbaticals at 30% of pay. And, of course, to complete the trifecta of cost-cutting, salaries are being frozen for those already in place and reduced for the incoming classes.

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Regional firm Blake Lapthorn had its third round of redundancies, this time 33 staff, and possibly some number of attorneys.

The third clarification would have been to explain that no one had been laid off who had already begun work.

Freshfields has carved out its own path, announcing it will pay those trainees it doesn’t offer full-time positions an undisclosed amount in cash. That reflects the firm’s expectation that it will only be taking on 70% of its trainees, significantly off the 91% retention rate from last September and 86% from March. That’s really not a whole lot different than letting 10 trainees go through the program and then laying them off. It doesn’t qualify for the tracker, but it is worth noting here.

Fish & Richardson is straddling the line between layoffs and deferrals. Remember Glengarry Glen Ross? For those who don’t, here’s the line:

Blake: We’re adding a little something to this month’s sales contest. As you all know, first prize is a Cadillac Eldorado. Anybody want to see second prize?
[Holds up prize]
Blake: Second prize is a set of steak knives. Third prize is you’re fired.

The IP firm, which just laid off 120 people last week, is doing pretty much the same thing. One third of associates start on time, one third start in October 2010 with $5,000/mo to tide them over, and one third are fired before they even started.

Same goes for the 25 graduating law students who planned to start at the Massachusetts Superior Court. They just found out their clerkships are in scope of the statewide hiring freeze and they won’t be starting this fall.

If lawyers can be fired before they start, surely they can quit, too, right? Pillsbury thinks so. Not surprisingly, the firm’s "voluntary departure program" wasn’t well received. So now they’re offering a "voluntary non-employment program," pursuant to which they’ll reportedly pay $60,000 to any offer-toting first-year who volunteers not to start.

This article continues on Law Shucks, with the final layoff numbers, plus the other cost-cutting measures (deferrals, salary cuts, etc.), which were much more active this week.

 

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