In the dark days of 2009, we had frequent occasion to discuss the difference between “layoffs” and “performance-based dismissals.” Layoffs are generally understood as economically motivated, large-scale reductions in headcount, while performance-based dismissals involve specific individuals being asked to leave for cause. (Some see this as the difference being getting laid-off versus getting fired, although I’ve sometimes heard layoffs referred to as firings.)
The distinction can be a fine one. Unless cuts are made based on factors like seniority or practice area, layoffs often target weaker performers, so they can look a lot like performance-based terminations. There’s no bright-line cutoff, in numerical terms, for what constitutes a round of layoffs. And you can’t let firm characterization control, since many firms find it in their reputational interest to deny layoffs (unless the cuts are so large as to be undeniable; see, e.g., last week’s Weil Gotshal layoffs).
Today we bring you a story that captures this ambiguity. Several lawyers and staffers, totaling a number believed to be in the double digits, have been asked to leave a firm — but the firm denies that it’s conducting “layoffs.” We’ll present the facts and let you be the judge….
The firm in question is WilmerHale. Here is what we’ve heard:
1. The firm is in the process of conducting performance reviews (which happen twice a year).
2. In the wake of these reviews, at least ten associates have been laid off or otherwise asked to leave the Boston office.
3. At least four associates have been laid off or otherwise asked to leave the Palo Alto office.
4. The cuts have been concentrated in litigation, especially IP litigation.
5. Some associates have been given a few months to leave, while others have been asked to leave more quickly.
6. Associates are not being given severance, but some are being given a certain amount of time to remain at the firm — generally about three months — while they transition matters and search for new employment.
7. An unknown number of secretaries have been laid off firm-wide.
What could be motivating such cuts, especially in the field of IP litigation, which is widely seen as a hot area? Factors we’ve heard mentioned include worry about how the practice might be affected when superstar IP litigator Bill Lee retires, the loss of some major clients, concern about the general economy, and overhiring of laterals in recent years.
One of the affected individuals complained to us about the suddenness of the terminations. Because the laid-off lawyers had generally received positive reviews up to this point, the negative reviews and terminations came as a shock to many.
“We weren’t the type you’d fire for performance reasons,” this lawyer said. “We were all solid performers, good work product, top billers. We are being screwed.”
We reached out to the firm for comment. A spokesperson told us our information was “incorrect,” but she refused to say what exactly was incorrect, even when pressed to do so.
We’ll construe WilmerHale’s response to the latest reports as a denial of associate “layoffs,” which is consistent with the firm’s past practice. Although the firm will admit to staff layoffs, which it did in October 2009, and even to staff attorney layoffs, which it did this past May, the firm generally denies associate layoffs.
As longtime readers will recall, WilmerHale denied associate layoffs back in June 2009, when practically every Biglaw firm seemed to be laying off lawyers. In July 2009, however, we got our hands on an internal memo from Wilmer that confessed to some terminations that were “economic and not performance-based.”
One tipster told us the following about the recessionary reductions at WilmerHale:
Have you ever thought about looking at firms who say they didn’t do layoffs during the downturn, or where associates alleged stealth layoffs, to see if the numbers add up?
For example, in 2008 and 2007, WilmerHale allegedly had 1,192 lawyers: http://www.bizjournals.com/boston/stories/2009/01/19/daily51.html and http://www.bizjournals.com/boston/stories/2008/02/04/daily20.html.
In 2012, WilmerHale had 1031 lawyers: http://www.nalpdirectory.com/employer_profile?FormID=3287&QuestionTabID=34&SearchCondJSON=%7B%22SearchEmployerName%22%3A%22wilmerhale%22%7D.
That means 13.5% of attorneys disappeared despite continued hiring of summer classes.
In fairness to WilmerHale, though, such a reduction isn’t a smoking gun with respect to layoffs. Some of it might have been natural attrition, followed by a deliberate decision on the firm’s part to hire fewer people going forward, and some of it might have been true performance-based termination.
So, readers, what do you think? What is the difference between “layoffs” and “firings”? What label applies to what happened at Wilmer? And are similar things happening at your firm?
Let us know, by email or by text message (646-820-8477). We believe in keeping firms honest, but we can’t accomplish that mission without your help. Thanks.
Earlier: Nationwide Layoff Watch: Getting the Message Across to WilmerHale Associates
Departures from WilmerHale: An Interesting Internal Memo
Staff Layoff Watch: WilmerHale Lays Off 57 Staffers
Nationwide Layoff Watch: WilmerHale Staff Attorneys Getting Shafted