In the broader market, we see one possible indicator that layoffs may be slowing: initial jobless claims were down for the first time last week. The total number of people seeking benefits, though, set a record for the 11th straight week. How has that translated to the legal sector?
We were pleased to see things scale back down this week. The biggest news of the week was Baker & McKenzie’s fifth round of layoffs, in which 124 people were sacked (38 lawyers, 86 staff), and DeBrauw Blackstone Westbroek laying off 90 staff in Amsterdam. All told, only half as many people were laid off this week as last, and it was the third week of four in which fewer than 400 people were laid off from major law firms. Hopefully, this signals a break from March’s bloodbath.
The focus may be shifting toward future savings, though. Layoffs, start-date deferrals, and salary cuts aren’t the only ways to save money. One well recognized symbol of law-firm excess has always been the summer associate program. Now firms are not only scaling back the length of the programs, but many of the over-the-top trappings are being reduced or eliminated.
More on the week’s activity after the jump.
Other than bankruptcy, one of the few practice areas that was perceived to be resisting the economic downturn was hard IP. Townsend and Townsend and Crew, however, disproved that notion. The IP boutique admitted to “moderate” its “optimistic projections” by laying off 16 attorneys and 45 staff.
On the stealth layoff front, at least one firm has fessed up. Mintz Levin reportedly admitted to it at a recent all-hands meeting. We’d like some real numbers, though.
Rumors of stealth layoffs at Vinson & Elkins abound, but the firm tried to quash them. Supposedly, “The firm is going to cut at least $40 million in costs by reducing staff bonuses, no longer reimbursing out of town CLEs, making us pay for our own cell phones on our blackberries, waiting to upgrade computers and a long list of other cost-cutting measures.” That seems highly unlikely. According to the National Law Journal, 85% of budget goes to rent and personnel costs. Vinson & Elkins grossed $590.5 million last year ($250 million net). Assuming they somehow budget 100% of revenue, that leaves $130 million for non-personnel/non-property expense. So we’re supposed to believe they can cut more than 30% of that budget? How bloated are they? We’ve simply had too many independent sources claim that there have been extensive stealth layoffs at the firm, and nothing in the most-recent comments contradicts (or even addresses) that vile practice. At $250,000 saved per associate, layoffs are simply too efficient (even at a 30% net saving rate) a way to reduce expense. Cutting partners and senior counsel is even more effective.
Up north, where the economy has been somewhat more stable than in the US, partner cuts are front and center at McCarthy Tetrault. Partners in the Toronto Ottawa office have engaged counsel after getting word that their entire office might be cut loose. The firm has reportedly already cut 12 associates from corporate, contributing to the astonishingly low total of just 150 attorneys and staff laid off across Canada. The other Canadian firms reportedly having laid people off are Cassels Brock & Blackwell LLP, Fraser Milner Casgrain LLP and Bennett Jones LLP.
That’s just further evidence that the economic crisis is worldwide. Obviously, New York and London have been hardest hit, but layoffs are also spreading to such farflung places as Canada, Jamaica, Dubai, and the Netherlands.
As we mentioned above, we’re hoping this week restarts a recent trend – a slowing pace of layoffs. This chart shows layoffs by week (total of attorneys and staff).
Ten days in, April is significantly behind March’s pace. The numbers:
This week – 353 (100 lawyers / 253 staff)
This month – 667 (172 / 495)
This year – 8,530 (3,321 / 5,209)
Due to recent reporting of previous layoffs, this is the first time we can confirm 10,000 people have been laid off from major law firms in the current wave. Since January 2008 (when Cadwalader kicked things off) - 10,540 people (4,281 lawyers / 6,259 staff) have lost their jobs.
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Was fooling around with one of IBM's toys. You can also see a visualization of the weekly chart here
http://manyeyes.alphaworks.ibm.com/manyeyes/visua...