This Week In Layoffs: 08.08.09

[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.]

Come on, now! Last week, we made it all the way until Thursday afternoon before word came out that Alabama’s Bradley Arant was keeping the "weeks with a layoff" streak alive.

This week, it’s even more poignant because the end of the run was so close. This time it was yet another southeast regional firm raining on everyone’s parade. Florida’s Akerman Senterfitt has just confirmed that it laid off five of its 150 associates. At 2:30 on a Friday afternoon. Surely it can’t get any closer than that.

We soldier on.

Broader economic data are particularly interesting this week, as there are completely mixed messages coming out. There will be reports that unemployment has declined, and President Obama is excited, saying that the "worst may be behind us."

To the surprise of many, the unemployment rate dropped to 9.4% when most were expecting a small increase. Basically, there was still a net loss of jobs in July, albeit smaller than predicted and smaller than June, so how did the unemployment rate drop?

We address that burning question, plus the week’s events in law-firm layoffs and other activities, after the jump.

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So we have this weird situation where there are more unemployed people but a lower unemployment rate. To grossly oversimplify, it’s the result of two effects, both of which mean that we should be taking the optimism with a large grain of salt.

The first effect that could explain the dichotomy is that there is simply a smaller labor pool – that doesn’t mean massive numbers of people died or retired, it means they became so disaffected that they no longer collect unemployment and are no longer seeking work. So even though the numerator increases, the denominator decreases, resulting in a lower rate. This is a very bad thing.

The other explanation we’re going to oversimplify even more. This is where we start getting into the whole "economics is an art not a science" discussion, which we’ll try to avoid. Actually, it’s an even worse melding of economics, science, art, and, ugh, politics. They’re just not comparing apples to apples. Obama is using the seasonally adjusted numbers, but we already know those are skewed because there were massive front-loaded layoffs in connection with the automaker bailouts and bankruptcies. The unadjusted numbers show that unemployment did rise again for the month, as expected.

And remember how Obama said "the worst is behind us"? In a separate speech, he cautioned that 10% unemployment is still on the table by the end of the year. The White House is now spinning that those two statements on the same day aren’t contradictory. But what we all really should be taking away from this (which is what they probably would have said if they had thought it through before they spoke), is that this is a minor blip of good news with a long slog ahead of us.

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Sort of like the legal sector. We almost had some good news, then some firm had to go and ruin it for everyone.

Overall, the Bureau of Labor Statistics reported a 2,700 person drop in employment in the legal services sector on a seasonally adjusted basis (2,900 unadjusted). But as we wrote in the monthly roundup for July, only 604 of those were "tracker eligible" layoffs for various reasons (stealth layoffs and small firms, mostly).

Firm layoffs are bad, but their effects are largely isolated. Robert Ambrogi rounded up legal layoffs that are having much broader effects: layoffs at legal-services organizations around the country. A number of Massachusetts agencies are being forced to lay off lawyers, which is potentially causing tens of thousands of people to not be able to get representation. Out in California, public defenders have been forced to refuse certain types of new cases due to impending layoffs.

It’s not just the public defenders’ offices getting cut, though. District attorneys are also losing staff, forcing an equally unpalatable response: some DAs are engaging in what’s basically a "catch and release" program, in which the police are still making the arrests, but the DAs office isn’t prosecuting certain crimes.

In a game-theory sense, this poses an interesting dilemma for would-be criminals: go for it, and hope that if you’re caught, the DA will have bigger fish to fry, but if he does prosecute, it will likely be even worse for you because you won’t have a public defender to help you out.

At least over in London, they’re not taking all these layoffs lying down. A group of Linklaters associates are supposedly considering suing over the firm’s layoffs, and one may have actually filed already. Linklaters has laid off 350 total so far, putting it #6 on the overall top ten list, of which 200 are lawyers, ranking #4 for lawyers laid off. The cause of action is a bit sketchy and wouldn’t make sense in the US anyway:

Most insiders have said that the consultancy process itself was fair and the settlement generous, so the basis on which claimants may be suing is not yet clear. However, a clue comes from one former employee, who points out that the firm took on NQs in March, despite booting out six months qualified associates the month before. He argues that “there isn’t suffcient [sic] difference between the work carried out by NQs and those with six months PQE, and I wouldn’t be surprised if that decision did not amount to unfair dismissal“.

Maybe there are some green shoots, though. Offer rates for summer programs remain high (although when those summers will actually start working is another question).

The rest of the post is on Law Shucks, with a roundup of non-layoff activity, including salary cuts and other passive-aggressive behavior.