It goes without saying that the recession is forcing all sorts of Americans to confront the prospect of financial ruin. But lawyers have a particular cross to bear, one that involves a crushing amount of educational debt that was supposed to be serviced by the income from lucrative, highly secure law firm jobs. Now that job security is a thing of a past, there are a lot of lawyers who need a financial makeover. Sunday’s Chicago Tribune provided advice for struggling attorneys:
Aukse Rimas of Chicago is a trial attorney with a big new raise and a promising career. But she is losing sleep over what the recession-wracked economy could do to her.
The 29-year-old is juggling $225,547 in education loans and credit card debt–about three years’ worth of her $75,000 annual salary. She has a modest retirement nest egg and virtually no savings.
Something tells me that the financial experts are going to tell Aukse to spend less money. I haven’t read the full article or anything, but every financial planner I’ve ever talked to essentially tells me “your intelligence profile indicates that you’re too stupid to follow a budget.”
Today’s National Law Journal takes an interesting look a the mental and emotional health of recently laid off attorneys. Quite obviously, people lose a lot more than a paycheck when they lose their job:
For the first time in their lives, many of these lawyers are struggling with a profound feeling of failure. And while they acknowledge that their troubles are just a part of the jobless scene nationwide, such perspective provides little comfort for these high achievers who are grappling with a loss of purpose and direction.
It’s important to keep perspective during these tough times. We are talking about temporary setbacks, not ultimate failures. But even “temporary” depression is difficult to deal with:
In October, [Scott] Chait was let go from New York’s Wagner Davis, where his work focused on real estate transactions. A 2006 graduate of Brooklyn Law School, he is collecting unemployment and has moved in with his parents in New Jersey. Without providing specific numbers, Chait, 31, said he is burdened with “a full debt load.” Rigorous workouts help keep his spirits up, he said. “It feeds the need inside me.”
He describes himself as competitive, with a “Type A” personality, and said that critical to his daily routine is not sleeping in. He spends much of his day looking for jobs on employment Web sites. He also goes to his synagogue every morning. “I get a lot of positive enforcement,” he said.
Are there good coping mechanisms out there unemployed attorneys should be looking at? A psychologist weighs in after the jump.
A firm-wide email just went out announcing that 200 people would be let go. The cuts amount to about ten percent of attorneys and ten percent of staff:
It is against this backdrop that I am writing to inform you about some very difficult and unprecedented decisions we have made affecting lawyers and staff. We will be reducing approximately 90 legal and 110 staff positions from our Firm. The majority of the positions are in the US, with some in Asia and a smaller number in London. Altogether the reduction will impact roughly 10% of our lawyer workforce and roughly 10% of our staff workforce.
Is ten percent the magic number that firms are now trying to get rid of?
As we understand it, O’Melveny will be giving a three-month severance package. Latham wins the severance wars again. On the other hand, Latham laid off 440 people, which is just a little less than O’Melveny and Orrick combined.
While many of the O’Melveny people do not yet know if they will be part of the layoffs, the firm did send a message to all of its incoming summer associates. The future summers were informed of the bad news at the firm and told that summer program would be scaled back to a ten-week experience.
For those keeping score at home today, we’re looking at 60 people from Shearman & Sterling, 130 people from Dewey, and now 200 people from O’Melveny that are being let go today. Black Wednesday? Humped Day?
UPDATE (12:57): O’Melveny has released some additional news about its severance package to Above the Law. For some people, the package could be better than what is being offered by Latham. A firm spokesperson tells us:
Departing associates and counsel will receive a payment that is equal to 3 months as a minimum and 7 months as a maximum, based upon completed years of service, with two weeks for each full year of service, with no cap on the dollar amount. More importantly, our Firm provided meaningful bonuses in December of 2008, and significant salary increases in January of this year, which was not the case at all firms. We want to be fair and generous with those who remain, as well as those who depart.
These are both good points. As we’ve pointed out in the past, O’Melveny matched the Skadden bonus (except for NYC) for people who billed 1950 hours. And while Latham froze salaries, O’Melveny did not.
We’ll keep you posted. Read the full memo, after the jump.
Records are being set this morning at Latham & Watkins. At 8:00 a.m. Eastern time, managing partner Bob Dell sent out an email announcing that the firm is laying off 190 associates and 250 staff. These numbers are on top of any “stealth layoffs” that may have previously occurred at the firm in the past year.
Four hundred forty employees — 190 associates, 250 staff — is, as far as we know, more than any one law firm has ever laid off (not counting dissolutions). Latham is also the first Vault top ten firm to conduct major layoffs.
But Latham is also setting another record, of a more positive nature. Consistent with what we reported yesterday, the firm is offering “a comprehensive separation package, including payment of six months salary (up to total severance of $100,000) plus six months of continued medical coverage (through August 31, 2009).” This is the most generous severance package that any major law firm has given departing employees (see this table).
That will definitely soften the blow. But one LW source has a question:
No mention on any partner shifts — did they really grossly overshoot the number of associates and staff they needed for the economy we ended up with, but nail the number of partners needed just right?
According to Dell’s email, the cuts constitute approximately 12 percent of associates and 10 percent of paralegals and support staff. One LW tipster, however, tells us that in terms of U.S. associates being laid off, the number may be closer to 20 percent.
The full email from Robert Dell, plus more, after the jump.
The firm is not calling these cuts “layoffs.” Instead, the firm is finishing up semi-annual performance reviews and making cuts along those lines. The firm provided ATL with this statement:
Dewey & LeBoeuf maintains a semi-annual performance review process and we are currently in our year-end cycle. We do not comment on the specific outcomes of our performance review process or individual review conversations.
Some explanation about the Dewey & LeBoeuf review system, plus thoughts from tipsters, after the jump.
While the bad news continues to rain down on practicing attorneys, law students are the ones sitting there with a “deer in cataclysmic meteor event” look on their faces.
It’s been a while since we gave law students a chance to vent their frustrations, so here we go.
Today, NALP is out with actual statistics showing how 2Ls are seeing their jobs disappear in a pyroclastic flow. From a synopsis in the National Law Journal:
The median number of offers to 2Ls for summer associate positions at firms of all sizes fell from 15 in the fall of 2007 to 10 in the fall of 2008. The decline was even steeper at firms with 700 or more attorneys, where the median number of summer associate offers fell from 30 in 2007 to 18.5 in 2008. Additionally, fewer callback interviews yielded summer associate offers in 2008. In recent years, about 60% of callback interviews led to summer associate offers. Last fall, however, only 47% of callback interviews led to offers.
And after scrolling through the 20-page NALP report, we also noticed the shortening of summer programs:
Summer programs were typically 10 to 12 weeks long, regardless of firm size. Over three-quarters of offices reported summer programs of either 10, 11, or 12 weeks, although the lengths reported ranged from 6 to 19 weeks. For the vast majority of offices (80%), the 2008 summer program length was the same as in 2007. About 11% reported that their program was one or two weeks shorter compared with 2007; however, about 5% reported that their summer program was one or two weeks longer.
More numbers, statistics, and reasons to trade in your J.D. for a certificate of attendance in refrigerator repair, after the jump.
Can you imagine having to pay your firm money over the next couple of months because the firm overcompensated you at the beginning of 2009? That is the situation facing a number of Patton Boggs associates over the next couple of weeks.
Patton Boggs has a three tiered associate compensation system. A firm spokesperson explained the details to Above the Law:
Patton Boggs has three base billable hour tiers for associates: 1650, 1800, and 1900. Associates on one of the lower tiers who reach a billable hour total of a higher tier are automatically paid the salary differential in the early part of the next year.
Associates who don’t make their hours are bumped down to one of the lower tiers. But the whole decision making process is done as part of the firm’s annual performance reviews, many of which haven’t taken place yet. A tipster explains the consternation among many Patton associates:
If an associate is bumped down, their salary will be bumped down accordingly in an amount to be determined by the firm (i.e. not the full published drop between the 2008 rate for  and the 2008 rate for 1800 – as in some instances that could amount to up to 65K). So some don’t know if they will be bumped or, better yet, how much their salary will be for 2009. In general, people were pleased just to bump down as opposed to getting laid off or some other alternative.
But here is the kicker – associates [won't know if] they are being paid at the  rate until after their review, if at that time they are bumped down to 1800, they have to PAY THE FIRM BACK the difference in pay for the first 2 months of 2009. The “overpayments” will be spread out over 4 paychecks.
After the jump, the firm explains that this is nothing new at Patton.
At the MGM Grand, I was making money and folding often. Happy and rich (before everything went horribly, horribly wrong), I started talking to a player on my right. He claimed to be a mechanic, and expressed incredulity that the economic downturn was hurting lawyers:
You can’t fire a f****** lawyer, they’ll sue you ass.
Spoken like a man that has made more than one unreasonable estimate in his day.
Outside of the Biglaw bubble, lawyers are viewed as particularly litigious. Who knew?
According to the National Law Journal, law firms are also worried about former associates suing the firm:
After the layoff criteria are established, Hathaway [a Littler Mendelson shareholder] said firms should conduct a statistical analysis to ensure there is not “disparate impact” — meaning no one group, such as women or minorities, is affected disproportionately. Ekelman suggests to clients that they form a small review committee to analyze layoff criteria and decisions to ensure that they are applied fairly and consistently.
This is increasingly important because more attorneys than ever before are taking legal action against their former firms, Hathaway said.
But is there really a right way to fire people? More after the jump.
Time for a brief follow-up to our earlier post about Biglaw partner Robert Robbins, head of the corporate practice of Pillsbury Winthrop, and how he spoke — a little too loudly, on a crowded Acela train — about the firm’s planned layoffs. You may have already seen it in the comments, but in case it got lost in the shuffle, the firm has confirmed the gaffe (and the layoffs).
After getting its act together — the Pillsbury website was down for a while today, which some commenters attributed to web traffic resulting from the mini-scandal — the firm issued a statement to The Recorder (via Legal Pad):
It is an unfortunate fact in today’s economy that no business or law firm can rule out adjustments to their overall workforce levels. This includes Pillsbury, and, among other cost cutting measures, we will be implementing reductions to ensure that our resources are aligned with our business needs. We apologize for the unfortunate manner in which our deliberations about reductions have become public.
We reiterate our earlier advice: Pillsbury associates, start your engines laser printers, and crank out those résumés. It’s time to move on. Bob Robbins is coming for you.
We’ve collected selected links to coverage by other outlets — heck, it even made Gawker — of the “unfortunate” incident. Enjoy.
Dreams of a pleasant morning coding documents and browsing eHarmony turned into a nightmare for 66 assistants and paralegals at Day Pitney. Jim Sicilian, co-chair of the Executive Committee, told ATL via phone that 66 staff members were laid off across all firm offices. According to Jim, no associate layoffs are planned for the moment.
The news comes as somewhat of a relief because it initially appeared that the firm was mounting a black ops assault:
An assistant and paralegal in the hall near me were called down to a conference room and immediately let go. One was working on an assignment for me and left in the middle of it — never to return.
Or a government sting:
Head of HR is camped out in conference room and calling for people to come down. When they go back to their office, their computers are locked out, and they can’t even access to close out a document or grab personal files. Now, the office is paralyzed waiting for the phone to ring.
Town meetings are in store for attorneys and staff later today or tomorrow. It appears that some members of staff will be unable to attend.
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past seven years. You can reach them by email: firstname.lastname@example.org.
Things have changed recently in Korea – a few of our US and UK client firms are looking, very selectively, for a lateral US associate hire. Until just recently, there was not much hiring like this going on in Korea, since US and UK firms started opening offices there. We have already placed two US associates in Korea in the past month at top firms. Most of the hiring partners we work with in Korea do not actively work with other recruiters.
If you are a Korean fluent US associate in London, New York or another major US market, 2nd to 6th year, at a top 20 firm, with cap markets or M&A focus (or mix), or project finance background, and you are interested in lateraling to Korea to a top US or UK firm, please feel free to reach out to us at email@example.com or firstname.lastname@example.org. Our head of Asia, Evan Jowers, was just in Korea recently, and Evan and Robert Kinney will be in Korea in a few weeks. We are in the process of helping several firms open new offices in Korea (a number of which are interviewing our partner level candidates) and also helping existing offices there fill openings.
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For most attorneys, time spent managing the books is a necessary evil at best. Yet it is undeniably a crucial aspect of running a successful practice. With that in mind, we invite you to view or download a free webinar by Above the Law and our friends at Clio to learn how to better manage your finances.
Take this opportunity to learn what it takes to streamline your accounting and get the most out of your time. The webinar agenda:
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