This evening, many of us — and six Supreme Court justices, according to an announcement this morning from the Court — will listen to the State of the Union address. Don’t be shocked if President Obama tells us that the state of the union is “strong.” When was the last time a president appeared before us to announce that the union is in shambles? (Even Jimmy Carter never did that.)
The truth lies somewhere in between strength and shambles. And that’s true not just of the United States, but of the world of large law firms.
Let’s talk about two indicators: layoffs, and bonuses — including a reader poll, on whether firms will match Sullivan & Cromwell’s yummy spring bonuses….
With all due respect to the 745 individuals affected, 2010 was a modest year for layoffs in our little slice of heaven.
Law-firm layoffs in 2010 fell by a factor of 20 compared to the 12,259 people laid off by law firms in 2009, the worst year on record. Even 2008, when we had no idea what was coming, was 2.5 times worse than 2010, with 1,992 folks losing their jobs.
From over 12,000 layoff victims in 2009 to under 750 in 2010? That’s great news — but it seems a bit surprising, no? Did the pace of layoffs really slow down that dramatically? Maybe not; as Law Shucks notes, “layoffs are widely underreported.” It may just be that law firms conducted more stealth layoffs in 2010 — and succeeded in being stealthy.
(We try to help here at Above the Law; increasing transparency in the legal profession is an important part of what we do. But we can’t report what we don’t hear about — or what we hear about from a single anonymous individual, without corroboration. If you have layoff news to report, please email us, providing as much detail as possible.)
For more detailed coverage of 2010 law firm layoffs, including charts and graphs tracking layoffs by law firm and by month, check out Law Shucks.
Layoffs are down sharply, and law firm profits seem to be up, at least based on early reports of 2010 results. See, e.g., Quinn Emanuel (profits per partner up 16 percent); WilmerHale (profits per partner up 17 percent).
Growing PPP might be a sign of an improved economic climate that has reduced the need for layoffs. But they might also represent partners reaping the benefits of earlier headcount reductions, in terms of lower expenses — e.g., lower labor costs, thanks to all the laid-off attorneys and staff — and higher utilization rates for the lawyers who survived the cuts.
Are law firms sharing the wealth with their associates? This brings us to the next topic: associate bonuses.
Last Friday, Sullivan & Cromwell announced generous springtime bonuses, payable in April. They range from $2,500 for class of 2010 members all the way up to $20,000 for class of 2002 members. (See the full scale here.)
So far we haven’t heard anything about S&C’s “peer firms” moving to match. If you have such information, please email us or text us with the news. And if you work at one of these firms — the big New York lockstep firms, like Cravath, Skadden, Davis Polk, Simpson Thacher, Weil Gotshal, Cleary Gottlieb, Debevoise — feel free to discuss in the comments, or take our poll:
The Year in Law Firm Layoffs – 2010 [Law Shucks]
2010: The Year in BigLaw Layoffs [WSJ Law Blog]
2010 Sees a Huge Dropoff in BigLaw Layoffs; Fewer than 800 Job Losses Chronicled [ABA Journal]
The Am Law 100: Wilmer’s Profits, Revenue Rise in 2010 [Am Law Daily]