Over the summer, we wondered: what can law firms do to prepare for a possible double-dip recession?
One obvious answer: firms can “right-size” themselves, by making sure that they are as lean and as mean as they can be. And this seems to be what has been happening over the past few months.
We haven’t seen much in terms of lawyer layoffs lately, but staff layoffs are another story. In fact, on the staff side, we seem to be looking at a trend of firms reducing their permanent staff positions in favor of outsourcing.
Since August, we’ve learned of staff layoffs at O’Melveny & Myers (75 positions) and Paul Hastings (45 positions) — both as a result of domestic outsourcing to outside service providers. In addition, Pillsbury Winthrop announced that it might have to cut staffers who aren’t willing to relocate to its new Professional Services Center in Nashville. This prompted us to ask: Is On-Shore Outsourcing the Biglaw Wave of the Future?
We’ll start with the Goodwin Procter news, which was announced earlier this month via internal memo (posted in full at the end of this post). A firm spokesperson issued this statement to Above the Law:
This fall, Goodwin made the decision to outsource its Records Management and Accounts Payable functions to Williams Lea, a vendor who has provided administrative support services to the firm in other areas for a number of years. We shared this news with the Goodwin community in an internal memo on October 13, following discussions with the employees in these groups.
– This decision affected 11 employees in the Records Management area and 7 employees in Accounts Payable. Together, these individuals represent slightly less than 3% of Goodwin’s administrative staff.
– As of today, we expect that 6 of the 11 Records Management employees will accept positions with Williams Lea and continue to work onsite at Goodwin offices in their former functions. As mentioned below, affected individuals who do not transition to Williams Lea have been encouraged to apply for other available open positions at the firm. Individuals leaving the firm will receive severance packages, outplacement assistance and other job search support.
– We believe that this decision will provide multiple long term benefits to the firm and its clients and vendors, including increased efficiency and productivity; access to improved systems and technology; enhanced service for internal and external clients; and cost savings.
While unfortunate for the affected individuals, the news is not shocking, given the trend in this direction. It’s also worth noting that this seems like a rather discrete development. On the lawyer side, Goodwin is expanding, naming 17 new partners this month and expanding in London.
Now, on to Fulbright & Jaworski. A tipster tells us:
More staff layoffs have hit Fulbright & Jaworski. This time it’s receptionists (Houston) … and a billing clerk (Austin).
Out of 17 current receptionists, F&J is getting rid of 12. The reason is “remodeling,” which will result in no longer have a receptionist stationed on each floor. Many of the receptionists being laid off have been with the firm over 30 years, and Fulbright has been their only employer. The people being laid off are supposed to put smiles on their faces and carry on until it’s their floor’s time to remodel, at which time their employment will end.
Burnett Staffing has been brought in to interview them for temporary and/or permanent positions elsewhere. When their employment ends, they will each receive six weeks of severance pay.
(It seems like a good time to be a Williams Lea or a Burnett Staffing.)
The five being kept will be called “concierges” and expected to answer the switchboard while roaming around making attorney/client travel arrangements and cleaning conference rooms.
A billing clerk was also laid off from the Austin office. No other details known.
Some Fulbright staffers seem discontent with their compensation as well:
Support staff has had three years in a row of 2% raises. Their end-of-the-year bonus has been eliminated. Their holiday bonus, which maxes out at 10% annual salary, has been reduced to under $2,000. The pension plan has been phased out and replaced with the new era pension plan, which reduces a staff’s annual post-retirement salary dramatically. For example, if the previous pension plan was calculated to pay $2,400/month, the new pension plan will barely pay $12,000/year. With rare exception, anyone who quits is not replaced. Staff is struggling with doing the jobs of 2-3 people.
All the while being told at each January annual staff “roadshow” meeting how the firm operates debt free and how profits have gone above and beyond the previous years’ profits.
The firm did not respond to our requests for comment.
It does seem that Fulbright is doing well. In Corporate Counsel’s recent report on who represents corporate America, based on a survey of which major law firms are used by Fortune 100 companies, Fulbright came in fourth on the list of Most-Mentioned Firms.
If Fulbright is flourishing as a firm, it’s understandable that support staffers who contribute to that success would like to share in the rewards. But if the choice is between no bonus and no job, people will opt for the former.
Thanksgiving will be here before we know it. Expect a few more layoff announcements this fall, before we enter the holiday season.
No firm wants to be the Grinch that stole staff jobs.
Ashurst Real Estate Funds Partner Duo to Join Goodwin Procter’s London Base [Legal Week]
Who Represents America’s Biggest Companies? 2011 Report [Corporate Counsel]
Who Reps 2011: Most-Mentioned Firms [Corporate Counsel]
Fulbright Lawyer Picked for DOJ Tax Job [The BLT: The Blog of Legal Times]
American Businesses Becoming Less Litigious, Fulbright Survey Finds [The BLT: The Blog of Legal Times]
Earlier: Is On-Shore Outsourcing the Biglaw Wave of the Future?
Staff Layoff Watch: O’Melveny & Myers Replaces 75 Humans With Technology
Two Partners Leave Paul Hastings for Nixon Peabody (Plus Paul Hastings staff layoffs.)
GOODWIN PROCTER — MEMORANDUM — ACCOUNTS PAYABLE AND RECORDS MANAGEMENT UPDATE
Last fall, Goodwin Procter transitioned its in-house document and presentation services to outside vendor Williams Lea. Our goal was to increase service levels while managing costs by consolidating functions with a trusted service provider. Feedback at all levels of the organization continues to confirm that this decision has increased quality, efficiency and productivity.
Over the past year, a Business Process Task Force reviewed the full complement of administrative services to determine which, if any, were candidates for process re-engineering, application of new technology, cross-department initiatives or outsourcing. As before, this evaluation focused on the potential for increased efficiency, service level enhancements and long-term cost savings for the firm.
After careful study and consideration, the firm has decided to outsource two additional functions at this time: Records Management and Accounts Payable.
In addition to cost savings, we expect outsourcing of these two functions to improve service delivery and provide us with access to enhanced technology and systems support.
Both the Accounts Payable and Records Management functions will be transitioned to Williams Lea. Accounts Payable will be handled through their facility in Wheeling, WV. [xxxx], Director of Finance-Operations, will oversee our Accounts Payable relationship with Williams Lea and [xxxx] will work with [xxxx] to coordinate the day-to-day relationship.
Williams Lea will also assume management of on-site Records services firmwide. [xxxx], Director of Firm Real Estate and Administrative Services, will oversee our Records Management relationship with Williams Lea. [xxxx], in addition to continuing to serve as the firm’s Manager of Conflicts, will coordinate the day-to-day Records Management relationship.
Yesterday, we informed our Accounts Payable and Records Management team members about the firm’s decision and discussed the impact of the change. We anticipate that some, but not all, of the affected Records Management staff members will be offered onsite employment by Williams Lea. With the exception of one supervisor, all current Accounts Payable employees will be leaving the firm, although we expect that Williams Lea will discuss employment opportunities at their Wheeling, WV facility with these individuals.
As with former Document and Presentation Services employees, affected individuals who do not transition to Williams Lea will be given the opportunity to interview for relevant open positions at the firm, and we will provide comprehensive severance packages, outplacement services and other support to them. In addition, we will pursue all available channels to assist them in finding new jobs.
We have already taken steps to begin transitioning these services to Williams Lea and we expect to complete this process in December 2011. Initially, we anticipate that all Records and AP procedures will remain the same. We will be updating you as the process continues. In the interim, please don’t hesitate to contact [xxxx] or [xxxx] with any questions.