Law Shucks, Layoffs

This Week in Layoffs: 01.17.10

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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.
If you thought unemployment and underemployment (which does include people who become discouraged and voluntary stop looking for work) were arbitrary and capricious, you’ll really enjoy the latest explanation from the White House.

The White House has abandoned its controversial method of counting jobs under President Barack Obama’s economic stimulus, making it impossible to track the number of jobs saved or created with the $787 billion in recovery money.

Despite mounting a vigorous defense of its earlier count of more than 640,000 jobs credited to the stimulus, even after numerous errors were identified, the Obama administration now is making it easier to give the stimulus credit for hiring. It’s no longer about counting a job as saved or created; now it’s a matter of counting jobs funded by the stimulus.

That means that any stimulus money used to cover payroll will be included in the jobs credited to the program, including pay raises for existing employees and pay for people who never were in jeopardy of losing their positions.

That lede is a little skewed, though – it was always impossible to track the number of jobs saved or created. The administration just finally realized that, and now the Republicans are going to have to find a new angle of attack after coasting for a year on easy cheap shots against the White House’s unsupportable numbers.

However many jobs the plan saved, created, or funded, unemployment ticked up again slightly last week, but the general trend is still flat or slightly improving.

Similarly, law-firm layoffs have slowed down, although there are still no signs of significant hiring. Developments in that little slice of heaven after the jump.


While there may not be any significant hiring (not that it’s the right time of year for that anyway), the lateral market is opening up slightly as year-end distributions are finalized and partners decamp for whatever pastures they perceive to be greener.

Unlike the UK, US firms have no obligation to report anything to anyone (other than their partners, sometimes their creditors, and the IRS). That’s why there will be a bunch of apparently conflicting reports for the next few weeks. Industry analysts like Dan diPietro, head of Citi Private Bank’s Law Firm Group say 2009 was awful, and would have been far worse had firms not aggressively cut costs. Meanwhile, K&L Gates is announcing record revenues, and increased profits per partner.

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How do we reconcile those messages? Easy, the firms that had decent 2009s are racing their results out the door, knowing that they’ll get maximum exposure right now, as everyone is expecting calamitous results. Firms that had "normal" years (which means gross revenue down 4%, compared to +7% in 2008 and +12% in 2001-2007) are keeping quiet, waiting for the initial hype over the outliers to die down. They’ll make a quiet announcement, express some optimism, point out some successes, and wait for next year. Those with poor results won’t announce anything and will hope their numbers go out on the same day as a bunch of other laggards so they get lost in the shuffle.

K&L Gates is a good example of timing the announcement. They’re out early with results that would be terrible in any other year but are way better than expectations (just like if a company "beat expectations" on Wall Street – doesn’t matter if it was because the loss was less or the profit was greater than consensus estimates). They’ve got a nice, splashy number – they became one of the few firms to crack the billion-dollar mark in gross revenues – and PPP was up. Look a little deeper, though, and it’s a bunch of hype. K&L Gates acquired Bell Boyd & Lloyd last year, so that added 250 lawyers. At a reported $610,000 RPL, that adds $152,500,000 to the gross revenue. The merger alone increased revenue by almost 20% and pushed it over that magic headline number. Then the firm went and helped itself to a sampling of each of the costcutting measures we write about: freezing salaries, cutting salaries, deferring associates, laying off staff, and laying off associates. That’s how you bump PPP 1% without any actual accretive benefits from a merger.

So don’t worry, David, you’re not wrong, it’s just early.

As for this week’s activity.

Just one confirmed layoff, so we’re curious to see whether other firms will be as forthcoming, as review season heats up and the temptation to go the stealth route beckons. We also got confirmation that Schulte’s November layoff was worse than previously indicated, with 36 attorneys laid off – far more than the baker’s dozen originally reported. And for the record, we’re not going to go back and revise the Year-end Review, but the dynamic charts will automatically reflect the additions.

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Dickstein Shapiro. Did… Something. We’re just as confused as Elie:

Is it that Dickstein just wants to use some vaguely merit-based language with its lockstep structure because it tests well? Or is Dickstein actually trying to shoe-horn merit-based factors on top of what used to be a straightforward lockstep system?

Unfortunately, poor messaging isn’t limited to Dickstein Shapiro. Nine Texas firms sent out offers that we’re pretty sure wouldn’t meet the criteria for offers under the UCC (if it applied, which we know it doesn’t, so spare us the comments) (HT: ABA Journal). Students are accepting offers with no set salary or start date. We just think that’s a little odd but not really cause for concern – for better or worse, they’re going to get paid "market" at those firms, whatever it happens to be. And it’s not like there are a lot of alternatives right now.

What’s really strange is that acceptance rates were down at three of 17 Texas firms surveyed: Akin Gump; Hunton & Williams; and Weil Gotshal. We’re really curious what happened there.

Back in New York, Kaye Scholer is cutting base salaries, but the upside is potentially huge (and the worst you can do is zero, right?). First years will earn $145,000, but their January paycheck will apparently be for 100% of their billables. A 300-hour month and that’s almost a 100% bonus.

The week’s, month’s, and year’s totals are in the full version of the article on Law Shucks.

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