Layoff Patterns: Was There a Method to the Madness?

We’ve talked a lot about the cluster of factors that led to massive law firm layoffs throughout 2009. But why did law firms fire the specific people they let go? Let’s say that a firm fired 10% of its associates (whether openly or stealthily) in 2009. That would mean that 9 out of 10 associates kept their jobs. So what was up with the one person who was laid off?

A new report tried to answer that question. The Blog of the Legal Times reports:

Think a recent graduate from a top 10 law school is less likely to be laid off from a big firm than the less-prestigious associate down the hall? Think again. A new study by Paul Oyer, a business professor at Stanford University, and Scott Schaefer, a business professor at the University of Utah who was not on the panel, found that the opposite was true, though that trend flipped after lawyers built up a few more years of seniority. Oyer also said younger lawyers were far more likely to be laid off than older lawyers. Oyer presented the results of his study at a panel moderated by The American Lawyer’s editor in chief, Aric Press, at the “Law Firm Evolution: Brave New World or Business as Usual?” conference.

In a way, that makes sense …

If you were the only lawyer hired from [insert lower-ranked school of your choice here], there’s a good chance that people at the firm had a strong and positive feeling about your potential. If instead you are one of many junior associates from [insert favorite T-14 diploma mill], then it might be easier for the firm to let you go when they have a few more just like you.

Of course, leave it to a consultant to beat the “entitlement” drum:

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Peter Zeughauser, who owns The Zeughauser Group, said during today’s panel discussion that Oyer’s data might reflect a “sense of entitlement” among graduates from prestigious schools that only join a large law firm to pay off loans. “They may have no intention of pursuing a Big Law career and aren’t that productive while at the firm, which would make them more likely to be laid off,” Zeughauser said.

Great, so if you go to a law firm to pay off your loans, you’re more likely to be laid off. Important safety tip, kids: go to a law firm with no intention of paying off your loans, and carry a “sense of low self-esteem”; you should be golden.

But don’t discount the importance of networks:

Oyer also found that what he dubbed “school-based networks” came into play when associates were laid off. Oyer said that meant if there wasn’t a partner in the office who went to the same school as an associate, that associate was more likely to be laid off.

Is “school-based networks” the politically correct way of saying “old boys’ network”? That’s cool, I guess. I’m all for new words to describe old phenomena.

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CORRECTION: Paul Oyer emailed us to correct and clarify what he was getting at regarding the importance of networks:

We found that school-based social networks are related to associate turnover and quite strongly so. But we found no such relationship between these networks and layoffs. Specifically, if an associate went to the same undergraduate or law school as some partners in his/her office, we found that associate to be less likely to leave the firm. But we did not find that associate less likely to be laid off. I think that’s an important distinction.

There’s a natural human need to explain the world around us. Why did some people get laid off while others survived? Hopefully law schools and consultants will continue to study the issue. “Randomness” is rarely a satisfying answer.

Patterns Emerge from Lawyer Layoffs [The BLT: Blog of the Legal Times]

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