This Week in Layoffs – 2/27/09

by lawshucks on February 27, 2009

This week seemed like it would start off relatively quietly after recent hysteria. The week ending February 20 was the first week in which major law firms laid off more than 1,000 people in a single week and, of course, the week prior to that we had “Black Thursday” or the “Valentine’s Day Massacre” (although I will always think of the Valentine’s Day Massacre as Drexel Burnham Lambert’s bankruptcy filing in 1990, which was also a slight misnomer, as it, too, actually occurred on February 13).

In fact, this week did start off relatively slowly, with just over 100 people laid off from firms such as Sheppard Mullin, Dechert, Linklaters, and Baker & McKenzie.  Although rumors had been stirring for much of the week, it was only on Friday that official word broke of the massive cuts at Latham & Watkins.

Analysis and context after the jump.

In one fell swoop, Latham vaulted to the #2 spot on the ranking of firms by total layoffs.  Latham’s 440 (190 associates, 250 staff) is second only to Allen & Overy, which has laid off 462 to date (260 attorneys, 202 staff).  Linklaters is pushed to #3 (210 attorneys, 150 staff).  Cadwalader (156 total), the firm that started this round, drops out of the Top 10 (although it remains in one black corner of our hearts).

In a final bit of irony, Latham is defending Thelen against claims that the firm violated the WARN Act when it dissolved last year and failed to pay or give notice to the terminated employees.  The silver lining is that Latham’s severance package is very generous (up to 6 months’ pay, capped at $100,000, plus benefits throughout).

The London firms have been more aggressive than their US counterparts in laying off fee-earners.  Ranked solely by number of attorneys fired, Allen & Overy and Links are 1 and 2, with Clifford Chance just 4 behind Latham, having laid off 186 attorneys so far.

Latham also takes over the top spot on the rankings for staff laid off, its 250 just edging out Holland & Knight‘s 243.  That list is far more American-centric, with only British firms A&O, DLA Piper and Links in the top 10. 

All told, 560 people were laid off by major firms this week – 252 attorneys, 308 staff.  To put that in context, more people were fired this week than in any month in 2008.  Last year, the two busiest months at major firms were December, which had 435 layoffs (186 attorneys, 249 staff), and November, which had 431 (223/208).

We’re also noting the beginning of a trend toward collateral damage.  Firms are finding a host of other cost-saving methods: delayed start dates (including Baker & McKenzie being particularly cheap about it), rescinded offers to 3Ls (including in the public sector at the Philadelphia DA’s office), fewer offers to 2Ls (and shorter summers for those who do get offers), and, of course, salary freezes have been in effect for some time now.  Not surprisingly, layoffs are spreading throughout the firms’ offices outside the US/UK.  The Central/Eastern European region is seeing heightened activity recently, as are the Middle East and southern Asia.

Updates to the Layoff Tracker:

Added:

Didn’t add:

  • Trowers & Hamlins (usual reason) - a UK firm that let go seven attorneys in the Middle East then followed up with four more from the UK real estate group;
  • Roetzel & Andress, which I’m informed is an Ohio firm that has 223 attorneys in 10 offices, fired 31 – 13 associates, 18 staff;
  • Similarly, Calfee Halter, apparently another Ohio firm, which laid off four lawyers (of 160) plus two staffers, mostly in Cleveland;
  • Bilzin Sumberg Baena Price & Axelrod, which laid off at least four – one nonequity corporate partner, one real-estate associate (ironically, the MP was being interviewed about the firm pulling out of a $58 million lease) and two secretaries;
  • Much Shelist Denenberg Ament & Rubenstein, a Chicago firm that laid off four staff and, not ”for economic reasons”, one attorney;
  • Maslon Edelman Borman & Brand, a Minneapolis-based firm of 80 lawyers, which laid off five staff;
  • Neal Gerber & Eisenberg, which terminated 19 of its 200 attorneys (the laid off included both partners and associates) and 32 staffers - the second round of layoffs for the Chicago firm;
  • Dundas & Wilson, a “big four Scots firm,” which has begun a redundancy consultation for 50 - 25 lawyers, including equity partners (there are 78 equity partners, to give a little perspective on size of the firm), and 25 staff in Glasgow and London; and
  • Hammonds, a UK national firm, for 20 partners (of 186 total partners, 74 equity).

We’re going to have to come up with some way of tracking stealth and other unconfirmed layoffs.  And we have to put Paul Hastings on that list.  Same for Dewey & LeBoeuf – like it or not, “performance” layoffs in this economy are going to be considered economic based unless and until the firms demonstrate that the same criteria are being applied year over year (e.g., Deidre Dare).  Rumors abound that further cuts are in progress at Kirkland.

The numbers (“BigLaw” only):

560 for the week.
2,708 in February (1,104 attorneys, 1,604 staff).
4,248 in 2009 (1,798 attorneys, 2,450 staff).

  • truth seeker

    Why do you say Hogan and Hartson laid of 149 when they only offered buyouts?

  • truth seeker

    Why do you say Hogan and Hartson laid of 149 when they only offered buyouts?

  • http://intensedebate.com/people/lawshucks lawshucks

    We treat buyouts and "voluntary redundancy" as layoffs for purposes of the tracker. They're both cost-cutting measures that are only being implemented as a result of current economic conditions. The layoff tracker is a commentary on firms' financial activities and vitality; offering buyouts has the same economic effect as layoffs do, albeit with a lesser amount of angst. People who were willing to leave firms in good times certainly didn't have the ability to also collect an additional 3 months' pay on the way out. Either way you look at it, these firms are paying for attrition.

    I can understand the question, though, so we'll clarify our stance in the methodology. Thanks for the feedback.

    • Dope

      Because if you don't accept the buyout you get thrown out.

  • http://intensedebate.com/people/lawshucks lawshucks

    We treat buyouts and "voluntary redundancy" as layoffs for purposes of the tracker. They're both cost-cutting measures that are only being implemented as a result of current economic conditions. The layoff tracker is a commentary on firms' financial activities and vitality; offering buyouts has the same economic effect as layoffs do, albeit with a lesser amount of angst. People who were willing to leave firms in good times certainly didn't have the ability to also collect an additional 3 months' pay on the way out. Either way you look at it, these firms are paying for attrition.

    I can understand the question, though, so we'll clarify our stance in the methodology. Thanks for the feedback.

    • Dope

      Because if you don't accept the buyout you get thrown out.

  • Stephen

    Thanks for keeping a running total of these numbers. Better site than Abovethelaw.

  • Stephen

    Thanks for keeping a running total of these numbers. Better site than Abovethelaw.

  • uk lawyer

    Just wondering why you've included the projected layoff numbers for UK firms before the actual layoffs have occurred. In the UK, a "consultation" process begins and last for up to 90 days, during which time employee delegates work with firm management to determine if alternatives to layoffs, of lower numbers of layoffs, can be done, and also to determine the criteria for layoffs. For example, A&O has announced projected figures for layoffs, but in the UK, at least, no one has been laid off yet. The axe won't fall until late in March at the earliest, and the figure might vary from the announced projected figures.

    • http://intensedebate.com/people/lawshucks lawshucks

      Similar reason as above. We're tracking the firms' health. Their estimates of how much cutting is necessary is the best information we have. If the actual numbers become available, we'll revise. Otherwise, we have to make do with what is available. At least with the UK firms, you're comparing apples to apples. Similarly, US firms have WARN obligations that mean they have to give extended notice before anyone actually stops working. In both cases, though, the announced layoff data are the best information we have.

  • uk lawyer

    Just wondering why you've included the projected layoff numbers for UK firms before the actual layoffs have occurred. In the UK, a "consultation" process begins and last for up to 90 days, during which time employee delegates work with firm management to determine if alternatives to layoffs, of lower numbers of layoffs, can be done, and also to determine the criteria for layoffs. For example, A&O has announced projected figures for layoffs, but in the UK, at least, no one has been laid off yet. The axe won't fall until late in March at the earliest, and the figure might vary from the announced projected figures.

    • http://intensedebate.com/people/lawshucks lawshucks

      Similar reason as above. We're tracking the firms' health. Their estimates of how much cutting is necessary is the best information we have. If the actual numbers become available, we'll revise. Otherwise, we have to make do with what is available. At least with the UK firms, you're comparing apples to apples. Similarly, US firms have WARN obligations that mean they have to give extended notice before anyone actually stops working. In both cases, though, the announced layoff data are the best information we have.

  • Pingback: Bitter News, 3-2-08 | Bitter Lawyer

Previous post:

Next post: