Law Shucks, Layoffs

This Week in Layoffs: 10.26.09

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.

We took the week off last week, but you didn’t miss much. In fact, we had another run of almost two weeks without a layoff, before WilmerHale laid off 57 staff. But we’ll get back to the layoffs after our regular sojourn through the broader American economy.

If you’re a regular reader of this column, this should sound familiar: initial jobless claims were worse than expected. 49 states and territories reported increased unemployment, with four seeing improvement. To the extent you believe this is a recovery (and even if you do, whether you believe this is sustainable is another question entirely), it appears to be jobless at best, and job-losing more likely.

Companies are salvaging net income numbers almost entirely on the expense side, and the stimulus has done nothing to create job and nothing demonstrable to save jobs. Just ask the Republicans, who point out that President Obama claimed his stimulus would create 3.5 million jobs, when the actual result has been a loss of 2.7 million – a 6.2 million-job deficit.

Part of the frustration, of course, is the long-running treatment of disillusioned jobseekers and people whose benefits have run out as not being counted as unemployed. When minor improvements in unemployment numbers were being hyped a few months ago, it now appears that was almost entirely the result of people falling off the rolls, not actually finding gainful employment. Maddeningly, that means 7,000 people a day are no longer counted as unemployed.

As usual, law firms continue to muddle through. Their efforts, after the jump.

Sponsored

During our absence, there was some interesting debate on whether Law Shucks and ATL are hyping layoffs. Greg Lambert at 3 Geeks and a Law Blog used ATL’s report of layoffs at Nixon Peabody as an opportunity to step back and see if there was any fire behind that smoke. He concluded that it was basically hype, because the firm had, according to his analysis, only a net loss of 19 attorneys since February.

We went into even more detail on his own data and showed that not only have the departed associates from Nixon Peabody not reported subsequent employment for the most part, but almost all of the hiring was foreigners and first years. Elie also rebutted, pointing out the difficulty of nailing firms down on layoff numbers (which tends to lead toward underreporting) and, more compellingly for our audiences, that affected attorneys simply don’t care about net numbers.

Inspired, Lat went and did some analysis of his own on another firm, extrapolating that Winston & Strawn had quietly reduced its headcount by 21% – even being as generous as he could in the assumptions, Winston would have laid off more than 100 lawyers in the past year. And let’s get off our high horses here, there is no nobility in stealth layoffs and it doesn’t protect the dignity of the affected associates. It’s entirely self-serving behavior by the firms, so we at Law Shucks would frankly prefer they just be candid about their no-comments, rather than pretending they’re doing anyone a favor by keeping quiet.

As the Nixon Peabody and Winston & Strawn analyses demonstrated, it’s difficult to extract accurate information from firms that aren’t forthcoming. Legal Week did some similar digging and discerned that Ashurst’s partnership is down by 10% this year.

Foley & Lardner laid off 39 lawyers earlier this month, but now claims the layoffs are over. Don’t confuse that with having enough work for its lawyers; while some lawyers will start "on time" (that’s in quotes because on time really means September/October in the year of graduation) in January 2010. The rest, including all IP assosciates, are reportedly deferred out until September 2010 with a $5k/month stipend.

Sponsored

So Foley is at least trying to keep up appearances. Squire Sanders is completely throwing its hands in the air, "indefinitely deferring" half of its incoming class. To ensure that everyone is in the same angst-filled boat, the firm also reported that cuts in the existing ranks are pending.

At this point we’re just scratching our heads at firms that are deferring associates that far out. Should they take the 2009 graduates, on the assumption that they’ve done something useful in the year off that will make them better lawyers, or just write them off and start with the fresh blood from the Class of 2010 and clear out the logjam?

Meanwhile, the particular area of focus for "innovation" is associate compensation. A number of firms are getting off lockstep, and that’s leading to reports of salary cuts. Dorsey & Whitney is one such firm, with the cuts to base pay being reported as flat comp cuts, although the "makeup" opportunity hasn’t come to pass yet. As firms pay lip service to the notion that the same overall compensation package is still achievable, we have yet to see what the final bonus numbers will look like. Meanwhile, people’s checks are getting smaller.

Finnegan Henderson is holding the line on salaries (with the new de rigeur reduction of first-year pay to $145,000), and rumors of stealth layoffs at the firm abound.

Harkening back to the days of the salary escalation, there are again signs of fracturing salary scales at firms with national presences. Morrison & Foerster is one firm that is reducing first-year salaries to $145,000 in all offices, except New York. California colleague Sheppard Mullin is spreading the pain without regard to cost of living.

We usually try to close with some good news, but the best we’ve got right now is word that, contrary to reports from the UK, Vinson & Elkins is one firm not giving the stink-eye to laid-off associates. At least those from Columbia and NYU.

Click over to Law Shucks for the final numbers and a few other firms that laid people off in the past fortnight.

Topics