Law Shucks, Layoffs

This Week In Layoffs: 10.10.09

By  
on

Ed. note: Above the Law has teamed up with Law Shucks, which has done excellent work translating all of the layoff news into user-friendly charts and graphs: the Layoff Tracker.
Many people fear that this will be a "jobless recovery" and those people keep getting more justification for their concerns. Unfilled positions fell to the lowest level since the Department of Labor began tracking the statistic in 2000, falling to 2.39 million, which is less than half of the number of spots available at the peak just back in July 2007.
That’s the heart of the increasing schism between the fantastic run on the major US equity indices since March (when law-firm layoffs peaked) and increasing unemployment. Earnings have been improving due to cost reduction, not "real" growth, and that’s likely to continue.

The U.S. economy may grow at an average 2.8 percent pace annual pace in the second half of the year, according to the median estimate of economists surveyed by Bloomberg News this month. Consumer spending, after rebounding last quarter as auto sales jumped because of the government’s “cash-for-clunkers” plan, will probably decelerate in the last three months of the year as the jobless rate reaches 10 percent, the survey showed.

Federal Reserve Chairman Ben S. Bernanke last week said economic growth next year probably won’t be strong enough to “substantially” bring down unemployment. The jobless rate will “still probably be above 9 percent by the end of 2010,” Bernanke said.

Sadly, the factor that has done the most to keep the unemployment rate down seems to be the massive number of people whose benefits are expiring or have simply given up looking, and thus no longer count.
It wasn’t a particularly good news in the legal corner either. For the first time in a few months, four of the AmLaw Global 100 have had reported layoffs in the same week. (Law Shucks did a comprehensive analysis, complete with charts, of all the layoffs in the Global 100 last week.)
Details of those layoffs, plus other cost-cutting measures, after the jump.


Unfortunately, all four have been less than forthcoming. Foley & Lardner quietly let go as many as 39 lawyers, mostly in IP. Paul Weiss has laid off as many as 45 staff attorneys over the past year. Akin Gump, which doesn’t really have any reason to be less-than-forthcoming, considering the firm has already laid off 169 people (47 lawyers, 121 staff) in two previous rounds, has trimmed its staff ranks in Washington but won’t provide numbers. Nixon Peabody, which laid off 56 people in February, is firing people under the guise of performance reviews.
Interestingly, three of those four firms are ranked within six spots of each other in the Global 100 – Akin Gump is #39, Foley is #43, and Paul Weiss is #45. Only Nixon Peabody, at #76, isn’t within that tight cluster. Speaking of which, Winston & Strawn, which is right in that wheelhouse at #42, has an ominous all-hands meeting scheduled for Monday the 12th. Is there something magical about that 39 – 45 neck of the rankings?
In another play we haven’t seen in a while, Crowell & Moring is soliciting volunteers for a staff RIF to get its lawyers:secretaries ratio down to 4:1. Law Shucks treats these programs as layoffs, so we’ll update as numbers come in; you can read about the rationale here.
While it may seem arbitrary, voluntary buyouts count as layoffs but rescinded offers don’t (hey, it’s no worse than the BLS calculations), so we won’t count Fenwick & West, which bought out some of its would-be class of 2009 associates. The payoff, $60,000 on top of the $15,000 summer stipend, is far more generous than most people in other professions will ever see, but small consolation for a career derailed so early.
Right now, it’s a race between year-end collections and 2010 projects against a possibly recovering deal market. Transactions-heavy practices are scrambling to hold on to make it a few more months in the hope that the worst is over. As managing partners start getting a better picture on what the final collections and distributions are going to look like, they may be forced to make additional cuts to keep their jobs.
Fenwick & West came up with something novel this week: "letters of endorsement" for the majority of its summer class, who didn’t receive offers. Fat lot of good that will do. Almost no one is doing OCI for third years, not surprisingly considering all the deferrals already. Further, there’s increasing evidence of hiring bias against laid-off lawyers, so it wouldn’t be at all surprising for that to spread to include people who were no-offered.
2Ls who are participating in OCI would be crazy to hold offers any longer than absolutely necessary. Edwards Angell has at least come out and said explicitly that the firm wants prompt responses – NALP and its "rules" be damned. Anecdotes abound of firms revoking offers prior to expiration of the 45-day window as classes "fill up." Will the class of 2011 pose any threat to the classes of 2009 and 2010 as the worst law-school classes (for job prospects)?
It wasn’t all bad news, though. Associates who have survived DLA Piper’s EIGHT separate layoffs, which put them at #2 in the Top 10 Firms by Rounds of Layoffs, are likely going to receive some sort of bonus this year. Depending on how cynical you are, Bingham’s most-recent pronouncement is good news – top performers will have an opportunity to be paid more. Considering above-class bonuses have been quietly paid to top performers since the bonus inflation started in 1999, we’d take it with a grain of salt. A long memo to explain an existing practice likely means the firm will use it to justify paying a low base bonus and having few people achieve market, let alone above-market, bonuses. But hey, we’re more cynical than most.
Hopefully those affected aren’t blowing their severance on cocaine, like (at least) one UK lawyer did.
As usual, the final numbers for the week, month, and year to date are on Law Shucks.

Sponsored

Topics