Ed. note: Above the Law has teamed up with Law Shucks, which has done excellent work translating all of the layoff news into user-friendly charts and graphs: the Layoff Tracker.

This week, economists missed on the good side — initial jobless claims fell by more than expected. The 502,000 applicants are the fewest since January 3, and the four-month rolling average is at the lowest level since November 2008.

It’s tough to grasp half a million people filing for first-time benefits as good news, but these are troubled times, so we have to cheer where we can. Don’t get too excited, though. Even news that looks good at first glance probably isn’t. The 139,000 people who came off the continuing-claims roster more likely did so as a result of benefits running out or giving up the search than actually finding work.

But don’t be surprised if that number starts creeping back up. A bill was passed last week that will extend benefits by 14 weeks in all states, and six additional weeks in states where the unemployment rate is greater than 8.5%.

All in all, it was a relatively good week in BigLaw, with no layoffs reported. Nonetheless, firms continue to flail about trying to fix their economic models, and we document the efforts after the jump.

Baker Botts will be throwing itself into the killing lockstep camp sometime in 2010. A tipster reports:

So, Baker Botts - Houston (should be firmwide, though I don’t have have all the details) is adopting a form of the Reed Smith pay structure. …

My understanding may be imperfect, but the notion is that it’s something like a three part system of junior associates, mid level associates, and senior associates, with pay discrepancies laid out among the three. No more lockstep. Unclear what the bonus structure is beyond the nebulous “merit” nonsense.

The Reed Smith structure has received a lot of attention. Last month, we mentioned that Reed Smith will categorize associates as junior, mid-level, or senior associates. But those classifications won’t necessarily be tied to how long an associate has been out of law school. So you could see a fourth-year classified as a senior associate making significantly more than a sixth-year classified as a midlevel associate.

Today, the Legal Intelligencer reports that the Reed Smith plan will also include a cut in associate salaries and billing rates:

Reed Smith has cut starting salaries by about 20 percent for the 51 first-year associates set to start in January and, in turn, is cutting their billing rates by the same margin.

You can read the full Reed Smith memo about its salary and billing rate reductions after the jump.

Will the Reed Smith system become the template for associate compensation at other firms? Let’s take a look at what Baker Botts is planning.

Ed. note: We mentioned it briefly in Morning Docket, but thought we’d say a bit more (and give folks a place to comment).

A number of large law firms — although, interestingly enough, not the Cravaths and S&Cs and Davis Polks of the world — are moving away from a lockstep system of associate compensation and promotion. See our collected coverage under Killing Lockstep.

The latest one to jump on the bandwagon: Reed Smith. From Ashby Jones of the WSJ Law Blog:

On Tuesday, Reed Smith announced yet another way to skin the cat. Starting early next year, the firm will go to a sort of hybrid lockstep/merit-based pay system for associates, called CareeRS (get it?). Associates will be categorized as junior, mid-level or senior depending not on how many years they’ve served, but on whether they’ve demonstrated certain “core compentencies.” That is, a particularly talented third-year associate might achieve the “mid-level” designation; a fifth-year on a slower pace might still be a “junior.”

According to the firm’s chairman, Greg Jordan, the move was a response, at least in part, to client demands. “The most painful conversation you can have with a client is to tell him that that all of a sudden, you’re charging more for an associate just because the associate has aged a year,” says Jordan. “Something needed to change. The recession made that clear.”

When the WSJ asked Jordan if the majority of associates would progress normally — getting bumped up to midlevel associate after three or so years, and to senior associate after six or so years — he was a bit vague:

“That may be what ends up being the typical pattern. But we really don’t expect that everyone will take this path. Some will advance quickly, others will need time.”

Hmm…. Should this be cause for concern among associates? How many will, like not-so-smart grade schoolers, get “left back” each year?

Some perspectives, after the jump.

We continue our slog push through the nation’s 100 top law firms, as ranked by our friends over at Vault. Here are the next ten firms, to be discussed in the comments to this post:

71. Reed Smith
72. Bryan Cave
73. Perkins Coie
74. Hunton & Williams
75. Patton Boggs
76. Arent Fox
77. Schulte Roth & Zabel
78. Howrey
79. Chadbourne & Parke
80. Crowell & Moring

Assorted observations about these firms, after the jump.

From two distinguished commentators: lawyer and law firm consultant Bruce MacEwen, of Adam Smith Esq., and Professor Daniel Filler, over at the Faculty Lounge.

Above the Law reader sentiment generally supported Fordham Law School and Dean William Michael Treanor. Interestingly enough, both MacEwen and Filler side with Reed Smith. MacEwen confesses to being mystified by Dean Treanor’s handling of the situation; Filler argues that Reed Smith’s late withdrawal from OCI was a minor infraction, and that Fordham’s “punishment” of the firm will only hurt students.

Check out their analyses via the links below.

In This Corner, AmLaw #16… [Adam Smith, Esq.]
Fordham Law v. Reed Smith, Or, How To Scare Away Firms From OCI [The Faculty Lounge]

Earlier: Fordham Law v. Big Law: Reed Smith’s Response
Fordham Law Lashes Out at Reed Smith Rudeness

Yesterday we covered the decision of Fordham Law School to ban Reed Smith from recruiting on-campus for the next five years, in response to the firm’s last-minute withdrawal from on-campus interviewing at Fordham. The decision was announced by Dean William Treanor in a strongly worded email message.

Dean Treanor’s email, while harsh, seemed to be well-received, at least among ATL readers. In our reader poll, over 80 percent of you deemed it an appropriate response to Reed Smith’s late pullout from Fordham EIW (Early Interview Week).

Reed Smith has now addressed the situation. From the Legal Intelligencer:

Michael B. Pollack, global head of strategy at Reed Smith, said this certainly isn’t a situation the firm was looking for and he suspects the ban isn’t a good situation for the firm or the students. He said he hopes Treanor would reconsider.

“We’re trying to run a business just like he’s trying to run a law school and I appreciate the pressures that he is under and I would hope he would appreciate the pressures we’re under,” Pollack said.

Additional comments by Pollack appear in Gina Passarella’s article.

We also reached out to Reed Smith, which sent us a detailed — and dignified — statement. Check it out, after the jump.

We’ve heard from many frustrated law students who bid on a particular law firm for on-campus interviewing only to learn, after using up a bid or an interview slot, that the firm in question wouldn’t be coming to OCI after all. We’ve even heard from students who were told, mid-interview, that the office they were supposedly interviewing for wouldn’t be having a summer program (but more on that later).

Law firms are certainly entitled to pick which schools they want to interview at. But, as a matter of basic professional courtesy and respect, they should make those decisions as early in the process as possible. When a law firm withdraws from the fall recruiting process at a given school at the eleventh hour, it causes great inconvenience to law students and schools.

What do most law schools do when firms pull out from OCI at the last minute? As far as we know, nothing. In this economy, law firms are in the driver’s seat. They’re the people with jobs to dole out.

But at least one law school has decided to take a stand against rudeness. After Reed Smith announced its late withdrawal from the recruiting process at Fordham Law, the school struck back, banning the firm from recruiting at Fordham for the next five years.

Dean William Treanor announced the move to the law school in a saucy email that truly puts the “F.U.” in Fordham University. The Fordham law folks are located at Lincoln Center rather than Rose Hill, but this message suggests they can brawl like their Bronx brethren.

Update (8/13/09): The firm’s response to the situation appears here.

Read the dean’s complete email message, and vote in our reader poll — yes, another one, we can’t help ourselves (we love to get your opinion on such matters) — after the jump.

Since December, Reed Smith has fired 215 people. So the latest news from the firm won’t be all that surprising. This morning, Reed Smith managing partner Greg Jordan sent the following message to the firm’s associates:

Over the past several months, Reed Smith has adopted many changes to our business in response to global economic conditions, changing client demands, and the competitive landscape in the legal industry. Among other things, this has meant lower compensation levels for partners. Today, we are announcing another change which we believe is appropriate to further sound business operations. Effective July 1, 2009, we will reduce associate salaries in the U.S. by 10% across the board.

What is marginally more surprising is the news about Reed Smith’s incoming first-year associates:

We will set the salaries for our incoming class of U.S. associates at a later date, but the new salaries will be at least 10% lower than current first year levels.

As The Dude might say, “That’s a real bummer, man.”

Our informal numbers tell us that fewer than twenty AmLaw 200 firms have cut associate salaries outright (this does not include the numerous firms that have frozen associate salaries). That’s not the best news, but we haven’t reached epidemic levels. Not yet.

Read the full Reed Smith memo after the jump.

Reed Smith already laid off 115 people in early December. Here at the end of the first quarter, the firm has decided it needs to reduce headcount even further. Above the Law has been able to confirm that Reed Smith is letting go 26 attorneys and 74 staff across its U.S. and U.K. offices. A firm spokesperson provided us with this statement:

Specifically, we are initiating the outplacement of 17 associates in the U.S. and have started a consultation process in London that will potentially result in nine associate redundancies. All of the affected associates are in the corporate and real estate areas of our practice, where demand for our services continues to be slow. Overall, this action will affect less than 4% of all of our associates.

I should’ve learned, to play the guitar.
I should’ve learned, to play them drums.
Maybe get a blister on your little finger.
Maybe get a blister on your thumb.

These layoffs bring Reed Smith’s total cuts to 215 employees in the past four months. Let’s hope this is the last round. Good luck to everybody who has been let go today.

Read the full statement after the jump.

The new year is shaping up to be a cold one. As we noted in our 2008 Year in Review series, one of the biggest stories heading into 2009 has been that of the salary freeze. Rather than instituting lock-step raises for associates entering a new class year, a number of firms have informed associates that their salaries will remain at 2008 levels.

There have been two types of freezes: the “Solid Ice freeze”—with salaries frozen through all of 2009—and the “Slurpee freeze”—where firms are sticking with 2008 levels for now, but promise to revisit the decision later in the year.

Many an ATL reader has requested a round-up, and we aim to please. So find your pleasure, after the jump. Some of the firms have been reported on before, and some are new.

If you know of other frozen firms, send us an e-mail at tips@abovethelaw.com with the subject, “Salary Freeze: FIRM NAME.” Also, if your firm has raised salaries as expected, feel free to send us the news, with the subject “Salary Raise: FIRM NAME.” While freezes are news, raises as expected aren’t, so we will not be covering firm by firm, but we may do a round-up.

Find the list of the sixteen firms that have frozen, after the jump.

It’s been a rough month at Reed Smith, as it has been for many a firm. Earlier this month, the firm announced layoffs of 115 people as well as a salary freeze for 2009. We still don’t know how many associates there were in that group of 115, but it definitely included associates from the firm’s London and U.S. offices.

A tipster tells us that the head of HR Mike Lynch met with the Associates’ Committee in the D.C. office recently to address the layoffs and offer some words of comfort about the future of associates at Reed. Some might describe them as cold words of comfort. Here’s an excerpt from a memo circulated after the meeting:

*There also have been some attorney layoffs across US offices. Mike Lynch said that the layoff decisions were made based on the results of the annual review process, for which there was a sharper focus this year. He said that hours and revenue underproduction and performance shortcomings were factors, and stressed that the decisions were made carefully, thoughtfully and on an individual basis. Also, there was not one particular office or practice group targeted more than another, although the transactional side recently has been lighter work-wise. Mike did not disclose the number of attorneys laid off, as he feels that information would be meaningless without any context.
*Mike did clarify several times that there are no current plans for future associate layoffs, however he did state that firm management (obviously) does not have a crystal ball and cannot predict the economic environment in the months to come. He said that management is simply going to see how things go and make decisions accordingly.

Lynch did not disclose the number of attorneys laid off, saying that the “information would be meaningless without any context.”

In the realm of “making decisions accordingly,” the firm issued a warning about a new notation on Reed’s year-end salary memos:

*There may be a notation listed in your salary memo, including one that says “First Quarter Review - hours.” Mike said that the notation is not intended to frighten anyone who received it, but only to be up front and indicate that things are not static or guaranteed. Management plans on monitoring the hours of those associates, although the notation does not indicate any type of probationary status. For those who received this notation, Mike suggested speaking directly with your PGL about how to proceed effectively.

In a time of slashed bonuses and increasingly common law firm layoffs, it’s hard to imagine how an hours warning would fail to frighten someone to near-death. This looks to us like a preparation for a new round of layoffs in early 2009. By instituting the new notation policy on salary memos, Reed has introduced a new way to give negative reviews, and could use it to justify layoffs in the first quarter.

Our tipster knew of just two associates who had received the “FQR-hours” notation— both had excellent reviews but were low on hours billed. More on Reed, and the disappearance of its “Departures” intranet page, after the jump.

While the Latham & Watkins salary freeze came as a shock to most in the Biglaw community, Reed Smith associates have known for days that their salaries would remain frozen in place.

Reed Smith laid off 115 people two weeks ago. Individual salary memos started going out to the remaining Reed Smith associates last week (Reed Smith makes salary decisions known on a person-to-person basis). Not surprisingly, most people are not getting 2009 raises.

Because of the individualized nature of the salary information, we can’t say that nobody at Reed Smith will be receiving a raise. We can say that nobody we’ve talked to has received a full raise, expects a full raise, or is hoping for anything other than having a job when the calendar flips over. A couple of people we talked to will be getting a small salary bump, but nothing at the normal level for their class.

Did somebody say something about bonuses? Our Reed Smith sources don’t expect to get that either. There hasn’t been any official announcement, but the rumblings around the firm all point towards the “special bonus” of $0. Though, one tipster points out that there are enough bonus complications that the firm might be able to avoid the negative press associated with a $0 bonus:

RS doesn’t give end-of-year bonuses. All of our bonuses are dependent on hours or performance or are related to profit sharing. Everything is discretionary, except profit sharing, which is based on the firms performance, and well, we know where that is.

The lesson, as always, if your firm recently picked up a bunch of Thelen attorneys, or a bunch of Heller attorneys, things are not going well.

Earlier: Nationwide Layoff Watch: Reed Smith Cans Staff, Associates, ‘And Your Little Dog Too’
Howrey and Reed Smith: Latest Beneficiaries of Thelen’s Shutdown

Reed Smith officially announced massive layoffs today. They didn’t do it “stealthily,” but you can’t really fire over 115 people and have it go unnoticed.

A firm-wide email explained the bloodbath:

Today we are laying off approximately 115 support staff personnel across our US offices. These layoffs include people in all of our support areas, including IT, finance, marketing, practice administration, knowledge management, human resources and office services. In addition, in London we are today commencing what is known as a redundancy consultation exercise, under procedures unique to the UK, that could result in the elimination of up to 7 support staff positions there. Lastly, we are also commencing a UK redundancy consultation exercise that could result in the elimination of up to 11 associate positions in the Business & Finance department in London due to overcapacity.

“Redundancy consultation exercise?” You have to love the British use of the English language.

I guess we have to be happy that Reed Smith decided to announce these layoffs officially. Reports have come in from multiple tipsters that the firm has been “quietly shedding people” for weeks. These moves will come to no surprise to Reed Smith associates working out of the New York office.

It’s sad to see the firm cutting so many people just after they acquired a large chunk of Thelen refugees. A couple of weeks ago, we reported:

Reed Smith is another firm profiting from Thelen’s demise. Check out the pun-aided press release from the firm:

“Reed Smith LLP, one of the 15 largest law firms in the world, experienced a power surge today, with the addition of a 14-member group from Thelen, headed by renewable energy law pioneer Ellen L. Bastier.”

These attorneys also come from San Francisco. Kudos to the new hires.

But, to quote Bill Simmons paraphrasing The Wolf, let’s not start licking each others’ popsicles just yet.

Remember, it wasn’t all that long ago that Orrick was happily announcing 27 new partner hires from Heller — 27 new partners then, 40 freshly unemployed associates now.

Pushing 115-plus Tony Rocky Horrors out of a window might be excessive, but Reed Smith people should have expected a “reaction.”

Read the Reed memo after the jump.

The Recorder is reporting that Howrey will take on 40 lawyers from Thelen’s prestigious San Francisco construction practice:

The group — which Howrey characterized as “most of the construction practice” from Thelen — includes Thelen Chairman Stephen O’Neal, construction practice head John Heisse II, D.C. office managing partner Andrew Ness, San Francisco partner David Buoncristiani (who handles matters for client Bechtel), Los Angeles partner Robert Thum and D.C. partner David Dekker. Most of the 18 partners and about 25 associates and of counsel are in San Francisco and D.C., and the rest are in New York and Los Angeles.

Hmm… Thelen attorneys, Chairman Stephen O’Neal, Howrey — where have I heard that before?

Oh yeah! You’ll remember that the Recorder initially broke the story on O’Neal’s flirtations with Howrey.

Immediately after Thelen dissolved, we mentioned possible options for the firm:

Option 1 is the plan they have arguably been pursuing: breaking up the firm practice group by practice group to interested parties. As we reported yesterday, this is the best option to save associate jobs. However, that plan is dependent on Thelen’s banks signing-off on the plan and maintaining their line of credit. Did Stephen O’Neal’s aggressive and ultimately public pursuit of his own lifeboat at Howrey scuttle that option? Once everybody is told that the managing partner could be leaving in ten days, why would other potential suitors compete for full Thelen practice groups? Instead, it’s easier to wait for an official dissolution and cherry-pick the rainmakers. This is what happened to Heller.

I’ll pause until the Thelen people stop screaming and hitting things.

Read about other Thelen landing places, after the jump.

The Vault 100 march continues! In this series of open threads, we list the firms, and you all discuss their upsides and downsides. We’ll be wrapping this puppy up this week.

Here are the next ten (with prestige scores in parentheses):

71. Nixon Peabody LLP (5.218)
72. Hunton & Williams LLP (5.208)
73. Perkins Coie LLP (5.119)
74. Reed Smith LLP (5.057)
75. Patton Boggs LLP (5.050)
76. Chadbourne & Parke LLP (4.997)
77. Bryan Cave LLP (4.969)
78. Thacher Proffitt & Wood LLP (4.967)
79. Howrey LLP (4.926)
80. Schulte Roth & Zabel LLP (4.910)

Usually, we have fun with the “notable perks” chosen by Vault. But as we move down the list, the perks are becoming distinctly less notable — e.g., gym membership discounts, free parking, and “good views.” Oh well.

You know what to do! Have at it in the comments.

Earlier: Vault 100 Open Threads - 2009

As some of you have noticed, we tend not to remark negatively on the innate physical attributes of our Legal Eagle contestants. There are several reasons for our reticence, but the most basic one is simply this: LEWW believes that prestige is beautiful. LEWW believes that every bride can look gorgeous on her special day if she has the right law degree. LEWW believes that a JD from HLS is like a great bra; it looks flimsy and has a jaw-dropping price tag, but it will support you and make you look better than you deserve.

Having made much of our reluctance to comment disparagingly about our subjects’ appearance, we’ll promptly depart from our own custom and announce that this is Hotness Disparity Week on LEWW. All of our grooms are decent-looking but undeniably average Joes, and we submit to you that all of them have married up.

See if you agree with us. Here are the couples:

1. Uma Amuluru and John Theis

2. Dena Fayad and David Guggenheim

3. Courtney Gregoire and Scott Lindsay

Click on the link below to read about these couples.

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.

Last week, we brought you a dramatic farewell e-mail from Shinyung Oh, who was fired from Paul Hastings after a miscarriage.

This week, we have another farewell e-mail, but this one is light fare for amusement value only. Our tipster says:

A friend at Reed Smith sent me this. It’s AWESOME. Author is staff/office clerk. And yes, he really did start it with “My fellow Americans.”

The Reed Smith staff member is leaving for grad school and e-mailed the entire San Fran office to say goodbye, and share his plans for the future. There are a few JFK quotes. The full e-mail is available after the fold, but here’s a taste:

As you all know, this is my last day with the firm. It has been a very interesting two and a half years and I have gained a lot of insight on the workings of a big corporate law firm. I have found newfound respect and admiration for all the work you do every day in a high-stress, fast-pace environment. However, I feel that this is the right time to move onto a new opportunity and challenge…

In our nation’s current state of affairs, there are many things that need to be changed, such as our diplomacy and image abroad, and I plan on being part of the solution….

I know that my future words and actions will not only represent the U.S., or American University, but also Reed-Smith LLP…

The interests of the American people will become my top priority and someday, I will be looking out for all of you…

Pompous, much?

We received over five hundred responses to last Thursday’s ATL / Lateral Link survey on client contact, and most of you have been enjoying extensive client interaction:

Results: How many times have you interacted with clients in the last month?

Of course, not all client contacts are created equal:

More findings and discussion, after the jump.

* Jose Padilla gets 17 years. [New York Times; Washington Post]

* A merger between Anderson Kill and Reed Smith? Maybe not. But 55 of Anderson Kill’s 126 lawyers have decamped for Reed Smith. [WSJ Law Blog; WSJ Law Blog]

* Ted Frank on yesterday’s Enron cert denial: Extortion, interrupted? [New York Sun]

* China shuts down “real-time” porn site, as part of its crackdown on online porn. [Reuters]

* Law tie (however tenuous) to Heath Ledger story: “Nicole Vaughan, 24, a law student at New York University, was in a seminar about Jesus when someone sent her a message about Mr. Ledger. She checked the Web, then walked to the apartment ‘because of the way our generation is; we sort of feel we’re a part of each other’s lives.’” [New York Times]

* Apparently Bill Clinton enjoys the Yale Law / Harvard Law rivalry: “I kind of like to see Barack and Hillary fight.” [NYDN via Drudge]