Law Shucks, Layoffs

This Week in Layoffs: 02.07.10

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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.
Regular readers of this column are well aware by now that the overall unemployment rate isn’t a particularly good indicator, but it’s the most-commonly discussed number so we use it. The predictions are always wrong, and the rate grossly undercounts the number of people any reasonable person would define as unemployed. But for all its problems, it’s not entirely useless to show trends.
According to the Bureau of Labor Statistics:

The unemployment rate fell from 10.0 to 9.7 percent in January, and nonfarm payroll employment was essentially unchanged (-20,000), the U.S. Bureau of Labor Statistics reported today.

That’s what we’ve been harping on all along. Overall unemployment didn’t improve because of a flood of people going back to work; it improved because so many people fell out of the BLS’s definition. We remain frustrated by any definition of unemployment that doesn’t include people who got frustrated and gave up looking or whose unemployment had outlasted their benefits.

About 2.5 million persons were marginally attached to the labor force in January, an increase of 409,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)

Among the marginally attached, there were 1.1 million discouraged workers in January, up from 734,000 a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million people marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

The U-6 rate, the government’s most-inclusive definition, is a little closer to what most people would think of when figuring out the unemployment rate, and that is still over 16%. But the trend is the same for both: January was probably slightly better than December (only probably, because the number of long-term unemployed was up again).
Still, there’s a long way to go, with an estimated 11 million jobs needing to be created to get us back to the 5% unemployment level pre-recession.
According to the BLS, 1,100 jobs were lost in the legal sector in January, compared to 2,100 in December, 2,900 in November, and 5,800 in October. That’s actually counter to what’s been going on in the BigLaw part of the legal sector, though. As we reported in the Law Shucks Month in Layoffs – January, while only 136 people were laid off from major firms in the month, that was almost double the mere 76 let go in December. Still, it’s a far cry better than this time last year – 1,540 people were let go in January 2009.
Curiously, this is also the fourth week out of five in which a solitary firm announced layoffs. It would be five for five but for a Law Shucks tipster who let us know about Marks & Clerk laying off a single person due to office consolidations last week, which the firm confirmed.
Howrey’s announcement that it had laid off 94 people (29 lawyers, 65 staff) was very frustrating, because Law Shucks knew about it a month ago. We e-mailed the firm’s leadership back on January 10 seeking confirmation of a tip that the decision had been made during Christmas week to lay off 27 lawyers (our source was off by two or they were subsequently added). They refused to respond to our inquiries, though. That just goes to show you shouldn’t count on someone else providing the information, if you’ve got something the media should know about, send it in yourself because we can’t report what we can’t confirm.
Howrey’s was the biggest layoff since Eversheds announced it was cutting 22 lawyers and losing 95 secretaries to outsourcing in September. There have been 26 smaller layoffs reported by major firms in that period. Prior to that, it was DLA Piper cutting 121 in July (LegalWeek just did an interesting piece on that firm’s increasing debt load, by the way). While those were in US offices, it’s still a predominantly English firm. The last time a US firm laid off more people was when Fish & Richardson laid off 120 people on May 13, 2009 (71 reported layoffs ago).
Difficult as it is for the individuals affected, layoffs of people from private practice don’t generally pose a risk to the public. That’s the concern raised by news that prosecutors’ offices in Wisconsin will be forced to cut personnel.
Elie called out Paul Weiss for an insensitive misstatement. The firm claimed that it had improved PPP "without resorting to layoffs." But the firm eliminated the staff-attorney program, resulting in layoffs of 45 non-associate attorneys. Actually, even if they had said "without resorting to associate layoffs," we would have called BS, because they’ve been long-rumored to be one of the firms engaged in the vile practice. If a firm is going to try to distinguish itself by claiming it hasn’t laid people off perhaps it should confirm that. Or at least define what they mean by "no layoffs." They probably didn’t want to do that, because then they’d have sounded like lawyers with something like "without resorting to an explicitly economic-based program of associate layoffs."
Of course, Paul Weiss is the same firm whose tactics just recently led Judge Rakoff to opine "even a zealous advocate might perceive that such an argument hints at hypocrisy."
In non-layoff news, the most-interest was probably Mintz Levin’s super-deferral. Members of the law school class of 2010 who have accepted offers from the firm will be starting no earlier than January 2012. Oof. On the happy side of the ledger, Cravath is holding a lottery to let some of its deferrees from the class of 2010 to start this fall (i.e., what we all used to call "on time").
Pillsbury at least gave some clear direction, unlike the mishmash of confused announcements we reported last week. If you can keep up with ATL jargon, that means that they’re not going lockstep and

it’s a true-up raise for some, a single class thaw out for those low on hours, and a salary cut for many outside of New York.

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(All that jargon makes me want to order a half double decaffeinated half-caf, with a twist of lemon.)
Mayer Brown also "unthawed," which puts the spotlight squarely on Sidley.
That’s how firms react to economic stresses. Individuals tend to vote with their feet, and there have been lots and lots of interesting lateral moves lately, all of which you can keep track of in the Law Shucks Lateral Tracker.
As always, the final tallies for the week, month, and year are in the continuation of the article on Law Shucks.

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