Biglaw

Sometimes It's Better To Be Fired Instead Of Stealth Laid Off

Believe it or not, there are sometimes many financial benefits to being fired in the traditional sense at some firms.

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This website has previously discussed the phenomenon of “stealth layoffs” within the legal community.  For those of you who do not follow Above the Law as closely as I have for the past decade, a stealth layoff is when a firm wants to get rid of an attorney, but they do not fire them in the traditional sense.  Rather, they tell the attorney that their days are numbered and then give the attorney some time (usually several months) to find a new job.  The firm typically provides the attorney ample leeway to go to job interviews, and supervisors usually do not tell prospective employers about the nature of the attorney’s departure.

Sometimes, attorneys subject to stealth layoffs do not find jobs so quickly and need to be terminated in the traditional way.  However, many times attorneys are able to secure employment without being fired, and both parties gain something from the arrangement.  The attorney gets to secure other employment and not blemish their career with the embarrassment and negativity associated with being terminated.  The firm also gets to maintain its reputation, and usually does not need to provide severance payments to the departing attorney.  However, there are certain situations in which it is actually better to get fired than to be stealth laid off from a firm.

Believe it or not, there are sometimes many financial benefits to being fired in the traditional sense at some firms.  Most Biglaw shops pay sizable amounts in severance to departing attorneys, in part to help attorneys during their career transition, and mostly to decrease their legal exposure in case an attorney wants to sue the firm.  Although the amount of severance varies from firm to firm, many Biglaw shops typically provide three to six months of salary as severance, and this can be a substantial amount of money.

If attorneys are able to find a job shortly after being laid off from a shop that offers this type of severance, they can devote their severance to purposes other than merely paying for living expenses.  This is especially true if you work in a state that pays unemployment benefits even if someone is receiving severance.  Indeed, if someone gets a job quickly, and devotes the lion’s share of their severance payments to student debt repayment, they could effectively pay off a sizable amount of their student loans.  If the job market is strong, and it is easier to find a new job, the severance offered by many firms can offer a substantial windfall that is often not obtainable by being stealth laid off.

In addition, being stealth laid off can be a worse experience than being laid off in the traditional sense.  I have never been stealth laid off myself, but I have some friends who have, and they have told me how negative the experience can be.  One colleague of mine described feeling like “the walking dead” around the office as a result of being stealth laid off.  Going to work is a rough experience for these folks, since it can be embarrassing and frustrating to interact with colleagues responsible for the stealth layoff.  In addition, setting a discrete time by which an attorney needs to find a new job can create an impending sense of doom.

Of course, being laid off in the traditional sense is no picnic.  Indeed, not having something to do with your time while searching for new work can be a lonely and depressing experience.  I am sure many of us (especially veterans of the Great Recession) know someone who has struggled with the tribulations of being laid off from a firm.

However, as previously mentioned, most attorneys in Biglaw receive considerable severance after being terminated.  In addition, being laid off in the traditional sense means that an attorney can use their time however they wish.  I am sure that everyone has heard the term “funemployment” at some point or another, and being laid off in the traditional sense, with an income stream from severance, can be a positive experience.  I personally know people who have traveled, pursued passions, and made other positive uses of their time after being laid off from firms.  Again, this experience varies greatly from person to person, but being stealth laid off typically binds an attorney to continue billing for a firm, whereas being terminated outright allows attorneys more time to do as they please.

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Furthermore, being stealth laid off sometimes does not guarantee that an attorney will have an easier time finding employment than if they are terminated outright.  If someone is laid off in a mass reduction in force (of the type covered many times on this website), people might understand that attorneys were let go not for performance issues, but because of financial troubles.  However, if a firm lets people go through stealth layoffs, and prospective employers discern this fact, then it appears as if the attorney was terminated because of poor work performance.  People within the legal industry are fully familiar with stealth layoffs, and if hiring partners catch wind of someone being stealth laid off, this might put that attorney at a greater disadvantage than someone who is subject to a larger, public reduction in force.

In the end, stealth layoffs are common within the legal industry, and it is typically understood that this process offers benefits to both attorneys and firms alike.  However, under certain circumstances, it is actually better to be terminated outright than subject to a stealth layoff.

Jordan Rothman is the Managing Attorney of The Rothman Law Firm, a New Jersey and New York litigation boutique. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jrothman@rothmanlawyer.com.

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