Lies, Damned Lies, and Statistics: Some Thoughts on Stealth Layoff Calculation
Last Friday, we reported on stealth layoffs at Nixon Peabody. We’ve previously discussed the difficulty of reporting stealth layoffs. If a firm lays people off slowly, over a long period of time, and refuses to admit it, sometimes the firm can keep the information from becoming public. In the Nixon Peabody case, the firm has still not confirmed the layoff news (unlike Foley & Lardner, which got around to confirming the layoffs we reported on last Friday just yesterday). But Nixon also hasn’t called us asking us to correct anything, which firms often do when they believe we’ve erred. The tipsters who have been laid off from Nixon continue to maintain that they were laid off from Nixon.
In any event, apparently some people think that reporting on people losing their jobs is more hype than substance. Tipsters sent in this post from 3 Geeks and a Law Blog:
Back in February, when the big round of layoffs were taking place, I took it upon myself to take a snapshot of most of the AmLaw 100 rosters via their websites. Nixon Peabody, of course, was one of these. So, I thought I’d dust off that list and compare it to today’s roster of employees. What I found was pretty interesting, but didn’t seem to be as dire as I’ve been reading in ATL or Law Shucks.
A firm’s website is only one part of the story, but let’s check out that part of the story, after the jump.
Even Greg Lambert, who ran the website subtraction test, admits a few of the obvious flaws in such an analysis:
I identified who was new to the roster, and who was no longer on the roster. This is not a scientific comparison, so please take into account that there could be a number of reasons for the “new” and “missing” roster members, such as name changes from marriage or divorce, and things like partners that have moved to different firms rather than being laid off.
One might also point out that a time-lapse website comparison isn’t going to catch people who were never on the website in the first place — you know, like some first-year associates (firms vary on whether they list them if admission is pending). A website analysis also won’t catch people who have been told they have three months to find a new job but can stay on in the interim.
All that said, here are the numbers for Nixon Peabody:
So, there does seem to be a net loss of 19 attorneys since the February snapshot. However, there has been an increase of 6 paralegals, and I’m pretty sure I haven’t been hearing anything about hiring at BigLaw firms. What I’m seeing from these raw numbers is that there is still movement within the firms (at least this single one I unscientifically surveyed), but I’d be cautious to buy too much into the hype of secret layoffs without digging a little deeper into the facts surrounding the comings and goings of these attorneys.
Let’s be clear, Nixon admitted that it laid off 20 associates and 36 staffers in February. This guy’s control group is the February website, so I have no idea if his base numbers include or do not include the announced February cuts.
The real problem with this analysis is with looking at net associate headcount. I’ve talked to a lot of laid off lawyers. By and large, they don’t give a damn about the net headcount at the firm. Replacing a fifth-year with a first-year associate, or with a lateral in a busy practice group — yes, the lateral market has started to pick up, or so our recruiter friends tell us — still represents a fifth-year associate who had a job, wanted to keep having a job, yet no longer has a job. (And, if that fifth-year was replaced with a first-year, the firm saved money.)
Despite the problems with the analysis, which even Lambert cautions is “unscientific[],” Bob Ambrogi at Legal Blog Watch is really pumped to have some numbers, any numbers:
Lambert’s findings do not necessarily disprove the reports of layoffs at Nixon Peabody. But at least Lambert adds some tangible facts to the mix of reports otherwise based on unnamed “tipsters.”
It seems to me that website attrition analysis is a useful part of the story, and the numbers Nixon’s IT department has put up on the web are interesting. But more accurate information can often be gleaned from talking and meeting with actual associates and partners. Those people have information that is never going to make it on to a law firm website (which, let’s recall, is a form of lawyer advertising).
Our sources don’t have overall numbers, and Nixon won’t admit to the overall numbers (as they did in February). That is pretty common when dealing with stealth layoffs. I know it is somewhat unsatisfying, but the only real fact available is the reality that Nixon Peabody has been laying people off over the past few months. We don’t know how many, but we know it is happening, because people who used to have jobs and wanted to keep them no longer have jobs. We’re not making it up.
If you are out on the market right now trying to get back into Biglaw, after your firm has laid you off and won’t even admit it, you are suffering from a lot of things. “Hype” is not one of them.
P.S. It’s also important to note that criticisms like Lambert’s relate primarily to stealth layoffs; they do not call into question the accuracy of the vast majority of our layoff coverage (despite innuendo to the contrary). As Lat points out in the comments of 3 Geeks and a Law Blog:
[F]or the record, these days most of our information about layoff numbers comes from (1) an official firm statement released to ATL in response to an inquiry, (2) an internal memo leaked to ATL, or (3) an authorized firm representative giving us official numbers, but on background (i.e., they don’t want it known that the numbers came from the firm).It could be that the firms are lying to us. Unfortunately, we don’t have a good way of determining that.
So, if anything, our layoff numbers may understate the number of departures. Our data is often based on what firms officially report, either internally or to us; but we’ve heard of firms that will both put out an “official” number of layoffs and then, on the sly, get rid of additional lawyers for “performance-based” reasons.
Are Above the Law and Law Shucks Layoff Alerts More Hype than Fact? [3 Geeks and a Law Blog]
Law Firm Layoffs: When the Facts Obscure the News [Legal Blog Watch]
Earlier: Nationwide (Stealth) Layoff Watch: Nixon Peabody
Nationwide Layoff Watch: Nixon Peabody Lays off 20 Attorneys, 36 Staff
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Zeroth
FIRST!
oneth
Many of the firms conducting stealth layoffs have kept the dismissed attorneys on their websites to keep the appearance. My friend remained on his firm's website full six month after he was let go.
So, this post is supposed to support the idea that stealth layoffs at Nixon have occurred and ATL isn't lying about it? It's certainly a long post if that's the case.
F.2d
How does this affect me?
- 6 year old runaway balloon boy
Let's not kid ourselves. Thelen brought Nixon down, plain and simple.
First to say autoadmit is a giant waste of electricity, but every once in a while there's a diamond in the rough. For example, someone took the firm's February NALP forms and compared it to the firm's websites:
http://www.xoxohth.com/thread.php?thread_id=1105017&mc=14&forum_id=2
Non-scientific, but interest anecdotal evidence.
Is it true that ATL laid off 3 editors today?
4 is right. However, most of the information ATL gets comes from unofficial tips and not authorized statements or leaked memos as Lat claims.
can 6 year olds qualify for the darwin awards?
I tihnk any large law firm that denies having been deeply hurt by the recession/depression are liars and therefore cannot be trusted. Frankly, it's particularly un-American to pound your chest that you are doing great while the vast majority of Americans are struggling to make it through these tough times.
7 & 12,
Making fun of the potential tragedy involving the 6 year old from Colorado is tasteless and you should burn in hell. My heart and prayers go out to the family and hope that the 6 year old is found safe.
Not that I'm the first to point this out, but ADL has lost almost all the charm and utility it once offered the law community.
This site takes every opportunity to possible to knock Nixon Peabody because the editors are just trying to recapture the glory days of the "Everybody's a Winner" fiasco. Stealth layoffs or not, NP's numbers are lower than most of the top 100, yet the firm is constantly mentioned.
Discrediting NP is good for ADL’s business. This site is a joke.
15 - ADL = Anti-Defamation League
If you think the site is "a joke," then don't come here.
14
Making fun of my future place of residence is tasteless and arrogant. I hope you enjoy your stay amongst the boring in heaven.
12
And what about S&C, the slithering snake of stealth layoffs? They've trimmed associate ranks quite a bit and cut the size of the staff by maybe 1/5 or more. Empty desks and offices abound.
Word is that there will be some big cuts at the end of the year, probably among staff. Apparrently they will wait becore laying off associates to see how many leave after bonuses are given.
The kid's name is "Falcon." Enough said.
milbank has laid off at least 1/3 of the associates in NY since last year.
9 - Thanks for the link. Interesting info.
On what economic planet do you come from with this statement
--And, if that fifth-year was replaced with a first-year, the firm saved money.--
That isn't true in the least. I won't make the law firm argument that first years are drain but replacing a 5th year with a 1st year does not save money. It is called compression and if both are working at the same rate a 5th year pawns what a 1st year makes for a firm. Add in that you don't have to write off a lot of 1st year time and it isn't even close.
In the Philly market, two great examples of stealth layoffs would be Duane Morris and Pepper Hamilton.
"This site takes every opportunity to possible to knock Nixon Peabody because the editors are just trying to recapture the glory days of the "Everybody's a Winner" fiasco."
No, this site takes every opportunity to knock NP because they brought on 100 Thelen attorneys. In trying to be a "White Knight," they got the Thelen taint and it is showing.
Has Duane admitted yet that it's suffering from taking on too many people from Wolf? Any layoffs yet?
22 - I'm not the original commentator, but saving money by replacing midlevels with juniors was exactly what my practice group did. By the time I left, the only work available was huge document reviews where clients would not agree to pay for reviewing attorneys that were any older than second-year attorneys. Meanwhile, the partners were taking the work that would go down to midlevels in better times. Result = midlevels sitting around doing nothing while junior associates did document review. So when the midlevels can't bring in any money for a firm because of the lack of work, but junior associates can, because clients will still pay their rates for document review, the midlevels are the first to go and the firm saves money because it's no longer paying a salary for expensive midlevels with no work - instead, it pays a lower salary for juniors who at least have grunt work.
I've laid off about 4.5 million in the past 9 months. But don't tell anybody.
Barack x.
Everyone's a winner at Nixon Peabody!
"Stealth" layoff means the firm failed to release some bullshit memo to ATL announcing the layoff?
When people have left Nixon Peabody, whether for layoffs or for other reasons, they are removed from the website that day (at least from those I've checked).
Let's face it, ATL probably fucked up on the recent report.
Everyone's a bullshitter at ATL!
At least have the decency to apologize for your screw-up.
Excuses are like assholes, Elie. Everyone has one, and they all stink.
Own up to your shitty reporting.
Stealth means the firm is masking economic layoffs as performance-based layoffs. I.e., the process is even more political than usual for biglaw. Firms sometimes keep people on for 5 or 6 months, to give a chance to get another job, so hopefully they can say they weren't laid off but left voluntarily. And it gives the associates the right to say they are attorneys in good standing at the firm.
Of course, that practice makes a lot more sense if there were jobs to be found during the past year.
33 - 29 here. So before ITE economy we pretended people laid off for poor performance were not laid off for poor performance?
Here's my take:
There are a bunch of different models for layoffs in large law firms.
First is open, public,"economy is slow, dawg." Probably good and bad people get let go. Lots of firms have done that this time arond, it used to be pretty rare. There has not really generally been too much of that before the credit crisis. This is the investment banking model. Some firms, I think, have even moved towards allowing you to just take the severance and leave without having to go through the charade of staying around to earn it. Seems like a nice option to have, if you want, although it sucks if you are trying to look for a job. Until a year or so ago, most people could find something decent with 4 - 6 months' notice, but probably not anymore. Most investment bankers I know who were sitting on their couches a year ago are still sitting on their couches.
Contrast this to (what I hear to be the) S&C approach (the "Stealth Sweatshop"), where you get told you are laid off like 4-6 months before you actually get to leave and they work you like a dog until that time is up or you leave for somewhere. I consider this the real, stab you in the face "stealth layoff." Places like this probably don't do any official layoffs at all. Maybe Kirkland did this, too? Some other places are like that, as well, and that strikes me as really, really miserable, and a place to avoid if they actually have been known to do that.
There is the model that arose out of the historic stealth layoff, or at least what people called it. The historical stealth layoff was individual, and it was a nice way of saying it was a performance-based layoff. "Ok, it's time for you to move on, you're going to be meeting with out outplacement consultant, you don't need to do to much around the office but get ready to leave in an orderly way." There's nothing wrong with this, this is the model. There are always warm bodies coming in. You don't get severance, but at least you get to have a job and still get paid for doing mostly nothing. Maybe some of those people are ready to move on and don't really care, maybe some of them are very hurt by it and lash out about layoffs (which is of course a reasonable reaction for them to have). Used to be, especially if there is enough work to be done, you can drag your feet on the way out, whatever, get staffed on something sneaky and you are good for a while for you to look for something. And, until the last year or so, you could find something and then you are out the door with a tidy two weeks - you can say you moved for whatever reason, and it's not big deal.
A lot of firms being accused of stealth layoffs, they are doing some layoffs under the old performance based model, and these people are still around in 6 months. Then, with things the way they are these days, it's time to go.
My impression that NP probably has about zero work to do, so you have to make deep cuts. I can't get too up on arms about firms not saying "Hey, as you well know, for each of the last ten years we have hired one hundred associates, and for each of the last ten years 95 associates have left through attrition. This year there has been zero voluntary attrition, down from probably 50% or so of attrition being voluntary. Also, work is down by 20%, so we really could do fine without 20% of our people. Accordingly, we are greatly slowing or freezing new warm bodies and for some other people it is time to go as well." It's kind of bullshit or them not to let these people be open layoffs if they are also doing those, but if you're doing real layoffs it's because you have no work to do. In that case, you don't want to make that number twice as big as it really needs to be.
Which model is best is left as an exercise to the reader.
My firm has done open layoffs and has also continued to show people the door for reasons which are very mildly performance based on a more regular timeframe at certain points in the year. My group is now slammed again. I don't have much insight into the rest of the firm.
The increase in partner compensation at large law firms during the last decade is really quite profound (probably doubled to tripled at many large firms). I think, wither the traditional big law passive aggressive nice - too many of the younger Turks are pushing compensation and wanting to get compensated like they work for a hedge fund or an investment bank in a good year. I can't tell whether it's like that at my firm or not - as a senior associate lateral I'm just not that plugged in.
29/34 -- 33 here: when a firm decides to reduce it's headcount by 10-20% because the partners have poor performance in getting/keeping business, what counts for performance in associates tends to change a bit. In other words, after years of steady billing, full bonuses and pay raises, firms suddenly deciding a significant percentage of their associates are, in fact, not up to the job. It's a question of honesty. Do you actually not know what you're talking about, or do you just take some special pleasure in the misfortunes of others?
Stealth calculation -- how about office closures ? I believe, one Cal firm has closed three offices during this recession. No press releases or announcements. It is all very hush hush. How about naming these firms!!
All of those recently let go from NP are still on the web site.
ATL report last week was not BS and I am glad people found the courage to call it out. I know I could not be the first. From past observations it appeared nixon peabody would usually remove an attorneys bio the day the attorney left the firm. There may be "alternate reasons" why nixon peabody has kept these attorney's' profiles on the web. The reason why this is so frustrating is that nixon peabody used to be really open, not this fake open communication nonsense getting fed to the masses by management and the statements about the salary cuts having been put in place to save jobs. Cannot wait to hear about when pandora's box blasts open at evaluation time. Don't know about post-Thelen "acquisition" but before that time the partner-associate ratio was about 1-1. It seems there are way fewer associates at nixon peabody than at other firms if you just do a headcount on comparable firms websites. Thats part of the reasons why the recent stealth layoffs or whatever seem so significant. Think employees are scared to comment on the situation to ATL because they are worried to get found out.
I want to know whether any of the attornies that have been showed the door have been Thelen attorneys.
Key point is that nixon peabody and some of its "peer" firms have not denied what their doing. The businesses these firms clamor to do work for have been very transparent about their layoffs. Why can't they? Five years from now when the economy is thriving again, people are going to remember who the true winners are.
Its important for students considering firms to see what kind of business decisions the firms' managements make during hard times--that includes what channels of communications were kept open at the time.
Point is layoffs have to happen if there is no work, but in light of the economy (and of the high tech we live in today where information is available at the click of a button) we implore places like nixon peabody to stop the bs and the rumored bad severance.
I could give a flying f*** about my evals at this point. They'd be doing me a favor by asking me to leave. I wake every day and wonder what I'm doing with my life. If the economy were better, I would have left months ago. So, yeah, make up some crap, give me some severance and release me from the worst job I've ever had. I'm sooooo scared.
I heard an AA hire, an LGBT member and an asslobster were laid off at ATL
Nixon associate here - looked at the raw data on that blog, and I can confirm that the people who were in the first set of layoffs were still on the website in the control sample. If the net was 19 fewer attorneys, then there's actually been a net hire since the layoffs.
anyone have info on stealth layoffs at fish? i hear they've been going on for some time now.
What I still find confusing (and please, if you are a labor & employment atty feel free to clarify) is how a firm can have people sign a seperation agreement, saying both parties will remain hush about the circumstances, then the firm reports that its previous layoffs were performanced based. I know the firm is trying to save face but is this not a breach?
19 people laid off, that's what I do before breakfast.
Dave Gordon of Latham and Watkins (the undisputed leader in layoff technology)