Firms Trying to Have, Eat Cake

Pic: U. Chicago

[Ed: An early draft of this post appeared for a while on Sunday night.  I thought I hit <save draft> when my wife insisted we start watching 24.  Sorry.  This is the complete version.]

An interesting theme is running through this spate of layoffs: firms are claiming that the layoffs are both fiscally necessary and performance based.  The two concepts are certainly not mutually exclusive, but it pushes affected attorneys under  the bus.

We track this round of layoffs back to Cadwalader Wickersham & Taft in January of ’08 (although Thacher Proffitt, McKee Nelson and others had earlier actions).  At that time, Greg Markel (Columbia BA ’67, Michigan MBA ’68, Yale JD ’72), a member of the CWT management committee, said “all of those laid off were talented lawyers that the firm had hoped to avoid losing.”  A seemingly innocuous and magnanimous description at the time.  The firm was assuming responsibility for, albeit not suffering the same repercussions as, the laid-off attorneys.  The message was basically, “things got worse than we thought, it’s going to last longer than we’re prepared to handle, we’ve had to make some tough choices.”  Small consolation, but at least there was no implication that the individuals affected were substandard lawyers.

As recently as last month, Proskauer Rose was toeing the line when it said: “We are taking these actions in response to the worldwide economic crisis, as well as an unprecedented reduction in our historical lawyer attrition rate, which requires that we align our staffing with current and projected levels of activity on behalf of our clients.”  Cahill Gordon & Reindel, about whom we can’t even find a good number (although 10% is being bandied about) has been held up as the model for how to handle the layoffs: discreetly, respecting the dignity of the affected, and making no comment about performance

After the jump, the “other” approach.The worst is the firms that are trying to have their cake and eat it, too.  Wildman Harrold (which has been added, by popular demand, to the Layoff Tracker) released a statement that is fairly typical of this approach:

The firm regularly assesses its personnel and makes ongoing adjustments. This is a standard process that we focus on at the conclusion of each year. Obviously the current economic conditions bring heightened attention to these otherwise normal business processes.

Howrey tries to take it even further, saying the layoffs are a pure performance play

As in every year, there is an outplacement of some associates based on performance issues. This year, as in previous years, this involves approximately ten associates and occurs only after an exhaustive evaluation process and review. The information that you received is incorrect and has mischaracterized this as layoffs.

These firms (and we include firms like Loeb & Loeb, Squire Sanders & Dempsey, and O’Melveny & Myers among this ilk) are trying to spin the layoffs as if the firm is simply behaving rationally.  They would have you believe that they are acting, more or less, in a manner consistent with past practice.

The problem with this approach is that not only does it unnecessarily throw attorneys under the bus, it can’t possibly achieve the benefit the firms must be aiming for.

Let’s agree that sometimes layoffs are simply necessary.  Corporate clients simply don’t care about layoffs – most are fed up with overpaid junior associates anyway (story for another day).

The only reason for a firm to comment on its layoffs is to affect recruiting.  Even with layoffs and smaller classes, fresh meat is always needed at the sausage factory.  The firms seem to have identified only two possible messages: “Market sucks, we were overly optimistic, had to make tough choices, etc.” or “We’re just doing what we always do and trimming the fat.”

If you’re a student in the unenviable position of choosing between firms that have had layoffs and explained it in one of those two ways, which one are you choosing?  The firm that admits its mistake and tries to move on, or the firm that blames the people least in control of their destiny? It’s simply an immature and unnecessary attempt to shirk responsibility (the initial hiring mistake – either as to quantity or quality) coupled with gratuitously making the job search that much more difficult.  Even though it’s implicit that firms keep the most-valuable attorneys, at least Cahill attorneys can claim they’re (a) leaving of their own volition, (b) part of an entire practice group that was let go, regardless of performance, or (c) the victim of circumstances beyond their control.

And this doesn’t even touch the issue of firms like Proskauer, which laid off first years three months after they started.  That’s inexcusable, in my opinion.  Those firms can’t even know who will be average, let alone superstars.  I can’t see how they’ll be recruiting for top talent any time soon (even if they did try to avoid laying off alumni of local law schools).

Related posts:

1. Bay Area Firms Getting Hit
2. Layoffs Saved Firms Almost $2bn in 2009
3. Most-Satisfied Summers Were at Firms Without Layoffs
4. Jones Day Ends 37-Day Layoff Drought
5. DAs Feeling the Pinch, Too

Tagged as: cadwalader, cahill gordon, howrey, layoffs, loeb & loeb, mckee nelson, o'melveny & myers, proskauer, thacher proffitt