This weekend, the New York Times explored the cascade of sadness left behind after massive layoffs. Aside from fear, the Times noted that there can be a productivity downgrade that shows up in real economic terms.
Too often, their anxious and overworked remaining employees become risk-averse and unproductive, or leave for other jobs. As companies hire new workers or turn to outside vendors to compensate, the short-term savings from layoffs can evaporate.
The National Law Journal also has some stern advice for layoff-happy firms. According to Bruce McEwen of Adam Smith Esq., “law firms that slash associate numbers in hopes of keeping profits-per-partner high may be headed for trouble.”
What else law firms can try, beyond going to $190K, after the jump.
A recent article in IP Law & Business suggested that rumors of the demise of IP specialty law firms have been greatly exaggerated. According to the piece, intellectual property boutiques continue to survive, despite encroachment on their turf by general-practice firms.
This is not to say, however, that everything is peachy in IP land. The article notes that Morgan & Finnegan, one prominent IP shop, “has lost 10 partners in the past year, and its overall head count is down considerably.” (We wonder if they included Jeremy Pitcock in the partner losses.)
The firm has been shedding associates and staff, too. Earlier this week, we heard from several tipsters that Morgan & Finnegan was laying off lawyers, technical and scientific advisors, and staff.
We confirmed the news with Pat Bowers, director of administration for Morgan & Finnegan. She acknowledged the layoffs (and even had the courage to use the “L” word, which many other firms shun).
The firm believes in “the importance of communication,” explained Bowers. “It’s not like we were doing it behind closed doors.” Prior to informing the affected employees, administration sent out a firm-wide email explaining that the firm was “scrutinizing our direct and indirect expenses, and looking at our staffing needs in New York and D.C.”
The affected employees were notified of the layoffs starting on Friday of last week and ending yesterday by close of business (so if you’re at the firm and haven’t heard anything, you’re in the clear). Bowers declined to provide exact numbers, citing confidentiality concerns, but said that (1) the firm “laid off less than 7 percent of attorneys and staff,” and (2) the cuts were centered on staff, not lawyers.
More details, below the fold.
Earlier today, the American Lawyer published a report detailing declining profit margins in the legal industry.
It is nice to see that somebody commissioned an entire report to figure out obvious facts like “the first half of 2008 looks very different from the previous six years” and “[t]he slowdown is hitting the most profitable firms the hardest.” In other breaking news, Britney Spears’s career has hit a bump in the road.
Instead of a simple doom-and-gloom economic report, Am Law columnist (and Biglaw banker) Dan DiPietro offers this proposed solution to all the law firm ills: fire the associates!
“There is a silver lining. A bad year (and the numbers suggest 2008 will be even more trying than 2001, when partner profits were down slightly) will enable firms to take steps that partners would resist in a good year — winnowing out unproductive lawyers and applying greater discipline to expense control.”
Partners, pundits, and others who like to play McKinsey & Co. on the weekends always suggest this form of fat cutting in tough economic times. But it is a disingenuous solution.
Read why, after the jump.
Late last night, a tipster told us of “a big round of administrative staff cuts” at Duane Morris. They were centered on the Philadelphia mothership, but also included other offices. As for the extent of the layoffs, “no good sense of how many, but big enough that the local managing partner fired off an email encouraging folks to come by his office and ask questions.”
This morning brings confirmation of the cuts, from the National Law Journal:
Duane Morris, an international law firm with Philadelphia roots, has cut about 18% of its marketing and business development staff, making staff reductions that echo moves at other firms in recent months.
The firm, which has about 650 attorneys, now has a marketing and business development team of 30 to 35 people, after eliminating seven managers and staff and hiring three more senior executives in the past few months, said Ed Schechter, the firm’s chief marketing officer.
Most of the eliminated jobs were in Philadelphia, where the bulk of the department’s staff is based, but some were in other offices, including Chicago.
True to form, they’re chalking it up to enhancing efficiency, rather than the tanking economy:
At Duane Morris, cost-cutting was a “secondary” consideration, with the firm primarily interested in building up a more experienced and leaner team, Schechter said in an interview.
The law firm of Reed Smith — which, as its Google listing reminds us, is “[o]ne of the 15 largest law firms in the world” — has been in the news a lot lately. Here’s a quick recap.
Some of the news has been good, and some not-so-good. Let’s get the bad news over with first.
Last month, a Pennsylvania state court judge gave the green light to an overbilling lawsuit brought by a former Reed Smith client — a non-profit organization, no less. From the Pittsburgh Tribune-Review:
A Lawrence County Common Pleas Court judge rejected four of five objections by the Downtown law firm Reed Smith, which was sued by a youth foster-care foundation in a dispute over fees.
Bair Foundation, New Wilmington, Lawrence County, sued Reed Smith in November for billing it nearly $1 million — in contrast to the firm’s early estimate of $112,000 in legal costs — to defend the foundation in an employment discrimination lawsuit, according to the complaint.
The $112,000 was a revised estimate; the original estimate, according to the complaint, was $50,000. And Reed Smith’s client ended up losing in the underlying lawsuit.
According to Am Law Daily, “[t]he matter has turned into something of a public relations nightmare for Reed Smith…. The complaint paints a picture of a billing machine run amok.” For its part, the firm denies the allegations and claims that it “will prevail.”
More Reed Smith news, after the jump.
Fried, Frank, Harris, Shriver & Jacobson is reducing administrative staff in New York and Washington. The reductions, which a firm spokeswoman said were less than 10% of the law firm’s 730 staffers firmwide, affect primarily floating secretaries, part-time assistants and paralegals and library personnel.
The layoffs, first reported on AboveTheLaw.com, resulted from the law firm’s review of its administrative resources and staffing requirements. The employees will receive severance packages based on years of service, the spokeswoman said.
Update / Correction: One source questions the claim that the layoffs affected “primarily” floaters and part-time assistants. According to this tipster, many of the laid off employees were full-time, senior secretaries — a number of them over 50, and some just a few months shy of getting their pensions. This source predicts that age discrimination lawsuits will be filed.
One tipster tells us the number of affected employees was in the range of 50 to 60, which would amount to under 10 percent of 730 staffers, and that severance amounted to one week of pay for every year of service. We also hear this:
Apparently, mail room, duplicating and facilities were told that their jobs were being outsourced by the end of the year. They could start looking for new jobs before getting laid off at the end of the year or apply with the outsourcing agencies (with no guarantees of a job or placement at Fried Frank).
New York staff were given “a few minutes to pack up and get out”; cars were provided to take people home (a nice touch — hopefully that will become “market”). One source claims that employees were laid off without regard to their seniority or their performance reviews, whether negative or positive.
What about attorneys? A spokesperson emphasized to us that Fried Frank “doesn’t do lawyer layoffs,” which was reiterated to associates by firm chair Valerie Ford Jacob at a meeting yesterday.
(Jacob also claimed that the firm has never laid off lawyers. But one source at FFHSJ begs to differ. This source claims that the firm laid off attorneys back in 1990, and then “suffered years of recruiting problems because of it,” which may explain its reluctance to go down that path today.)
More detail about the meeting, after the jump.
Last week we started hearing rumors of imminent staff layoffs at Fried Frank. The rumors have now come true, as we’ve been hearing from multiple sources. Today appears to be the big day.
We submitted an inquiry to the firm. A spokesperson issued the following statement:
Over two years ago Fried Frank began a review of its administrative resources and staffing requirements. As part of this review process some departments were expanded and others consolidated.
Today’s administrative staff reductions are part of that business review process. Those affected are in the Firm’s NY and Washington DC offices. Severance and career counseling were offered to all of those affected.
We aren’t sure of the numbers (and the firm has not yet responded to our request for that data). One of the rumors from last week said the number could be as high as 10 percent of total staff headcount. We hear that in the D.C. office, at least eight or nine people have been laid off, as of the time of this posting. The numbers in New York are said to be significantly higher than in Washington.
The affected employees include secretaries, paralegals, and library personnel. Severance packages appear to vary, from as low as seven weeks to as high as three months.
People are being called in and given the bad news individually. But meetings are also being held at 3:30 and 4:00 p.m. in D.C. (It’s not clear what New York is doing.)
One staffer in New York was given 30 minutes to pack up all belongings and leave the premises. In Washington, however, that’s not happening; one source describes that office as “more humane.”
We will bring you more information as the story develops. If you have information to share, please email us.
One of the more contentious issues in the legal profession this year is whether firms are conducting “stealth” layoffs, or simply culling non-performing associates after bad reviews.
Even among firms doling out these bad reviews, many say that performance standards have gotten tougher during the down market. Other firms, however, claim that their firms’ standards remain the same, and that the downsized departing associates simply didn’t measure up.
In today’s ATL / Lateral Link survey, we’ll focus a bit more on the review side of the equation. How often does your firm give real feedback, and do you think it’s actually fair? Update: This survey is now closed. Click here for the results.
– Justin Bernold is a Director at Lateral Link, the sponsor of this Associate Life Survey.
Lately we’ve been hearing various rumors about Shearman & Sterling. Some appear to be true, and some not.
Here are the rumors, followed by the firm’s responses, in blockquotes.
1. Have start dates for incoming first-year associates been pushed back?
Start dates for incoming first-year associates for fall 2008 are October 6, 20, 27 and November 3.
We don’t know what the 2007 start dates were (and the firm didn’t provide them), but we’re guessing they were earlier. But the 2008 start dates are not particularly late. Compare them to these firms’ postponed start dates.
2. Have there been any layoffs at the firm, of lawyers or staff?
There have been no lay-offs at Shearman & Sterling, of either attorneys or administrative staff.
This makes sense to us. Shearman did layoffs back in the early 2000s, which it later came to regret, when memories of the layoffs harmed the firm’s recruiting efforts once the economy came roaring back. So, having learned their lesson, we’d be surprised to see mass layoffs from Shearman now.
(But we wouldn’t be surprised if there have been some performance-related dismissals lately, especially on the corporate side.)
3. Did the firm make offers to all of its summer associates?
(We had previously heard, through the grapevine, that the firm had 135 summer associates and made offers to all of them.)
This summer we had 144 summer associates. There were four summer associates whose academic commitments precluded their joining the firm in fall 2009. We made entry-level offers to all but one of the summer associates available to join the firm.
Based on the high percentage of offers to summers, north of 99 percent, it seems that Shearman is doing just fine these days. But we are curious about that one SA who got no-offered.
Might there be a juicy but undiscovered summer associate scandal? Perhaps a new and improved version of the Shearman & Slur-Man? If you have info, feel free to email us.
(If it’s garden-variety incompetence, that’s of little interest to us. But if there’s an entertaining or salacious tale, we’d like to hear about it. Thanks.) Earlier: X-Summers: Shearman & Slur-Man
The holiday season is upon us, and yet again, you have no idea what to get for the fickle lawyer in your life. We’re here to help. Even if your bonus check hasn’t arrived yet, any one of the gifts we’ve highlighted here could be a worthy substitute until your employer decides to make it rain.
We’ve got an eclectic selection for you to choose from, so settle in by that stack of documents yet to be reviewed and dig in…
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 six years. You can reach them by email: firstname.lastname@example.org.
We currently have a very exciting and rare type of in-house opening in China at one of the world’s leading internet and social media companies. Our client is looking for an IP Transactional / TMT / Licensing attorney with 2 to 6 years experience. The new hire will be based in Shenzhen or Shanghai. Mandarin is not required (deal documentation will be in English) but is preferred. A solid reason to be in China and a commitment to that market is required of course. This new hire will likely be US qualified (but could also be qualified in UK or other jurisdictions) and with experience and training at a top law firm’s IP transactional / TMT practice and could be currently at a law firm or in-house. Qualified candidates currently Asia based, Europe based or US based will be considered. The new hire’s supervisors in this technology transactions in-house team are very well regarded US trained IP transactional lawyers, with substantial experience at Silicon Valley firms. The culture and atmosphere in this in-house group and the company in general is entrepreneurial, team oriented, and the work is cutting edge, even for a cutting edge industry. The upside of being in an important strategic in-house position in this fast growing and world leading internet company is of the “sky is the limit” variety. Its a very exciting place to be in China for a rising IP transactional lawyer in our opinion, for many reasons beyond the basic info we can share here in this ad / post. This is a special A+ opportunity.
If your firm is in ‘go’ mode when it comes to recruiting lateral partners with loyal clients, then take this quiz to see how well you measure up. Keep track of your ‘yes’ and ‘no’ responses.
1. Does your firm have a clearly defined strategy of practice groups that are priorities of growth for your office? Nothing gets done by random chance, but with a clear vision for the future. Identify the top practice areas for which you wish to add lateral partners. Seek input from practice group leaders and get specifics on needs, outcomes, and ideal target profiles.
2. In addition to clarifying your firm’s growth strategy, are you still open to the hire of a partner outside of your plan? I’ve made several placements that fit this category. The partner’s practice was not within the strategic growth plan of my client, but once the two parties started talking with each other, we all saw how it could indeed be a seamless fit. Be open to “Opportunistic Hires.” You never know where your next producing partner might come from, so you have to be open to it. I will be the first to admit that there is a quirky element of randomness in recruiting.
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