Law Shucks, Layoffs

This Week in Layoffs: 08.01.09

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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.]

This is getting ridiculous.

Every week we come closer and closer to the promised land: a week without layoffs. But still no dice.

This time, it’s a regional Alabama firm, Bradley Arant (#178 on the AmLaw 200), that went and ruined things for everyone. The streak of 31 straight weeks with a layoff by a law firm continues (it would be longer than that if not for the Christmas holiday).

At least the legal sector is no worse than the rest of the economy. This downturn is now officially the worst since the Great Depression.

Every significant firm, other than the above-mentioned party pooper, had the decency to avoid layoffs during the last week of most summer programs and bar-exam week. There were a few close calls and the other cost-cutting measures did continue, though. We detail them, after the jump.

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First: the close calls. Speculation was running rampant that Kirkland & Ellis has a list of attorneys to be laid off already drafted, but no activity has been confirmed yet.

Then, of course, there are the deferrals. Proskauer is the latest firm to push its current (law school class of 2010) summers’ start dates out to 2011. There are two troubling (to those affected) quirks. Most deferrals are going out to January 2011; Proskauer is talking about "fall" of 2011. There has also been no indication of a deferral stipend (nor has there been any word to the contrary, either).

It’s amazing how slowly and baby-step-y law firms are in the process of projecting needs and right-sizing staffing. They overhired and then were forced to lay people off. Then they realized they were overcommitted, so they deferred. Then they realized the deferral just delayed the overcommitment, so now they’re finally running out of buckets and are turning off the spigot with reduced participation in OCI. Congratulations! We’ve only been saying for most of the year now that this would have to happen.

The other sensible solution, first espoused by Orrick Herrington & Sutcliffe, is to hold off on the hiring until closer to the need. Orrick, and now DLA Piper, will wait until at least the late part of the fall to do OCI for summer 2010 positions.

Ropes & Gray isn’t scared, though – they’re looking at a 100% offer rate to the current crop of summers (albeit with a start date no earlier than January 2011).

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CitiGroup is cutting off the stream even closer to the source, canceling its 2010 CitiSelect program.

Meanwhile Cadwalader, the progenitor of the current layoff wave, continues to find new and exciting ways to innovate. The firm is offering its laid-off associates the opportunity to swallow their pride and become staff attorneys with the firm (albeit at a rate at or above the high end of the market). We can just imagine the awkwardness of the former sixth-year associate being moved to the basement to be supervised on a document review by the second year he bullied.

Salary cuts continue (although we’re seeing a lot more articles about salary cuts than we are about rate reductions), but at least this week there’s a schadenfreude angle for those so inclined. After some initial hubbub that Troutman Sanders was behaving particularly crassly by making salary cuts retroactive, it came to light that the problem was with the tipsters. They sucked at math and were at the steeper end of the sliding cuts, so they assumed their individual cuts, which were more than the blended 10% the firm announced, meant the firm was taking money back.

At Law Shucks, we applaud firms that try to correlate expenses with value, so we’re hopeful that Morris Manning’s sliding pay cuts, which were based on practice area, will get some play.

In more-generic salary cuts, Holland & Knight is rolling back between seven and ten percent (but again, the tipsters may be getting cut more than the firm average).

As always, a few more details and the final (mercifully small) tally can be found in the rest of this piece on Law Shucks.

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