Pic: U. Chicago
Unemployment hit a 25-year high in February, reaching 8.5%, and the legal industry isn’t immune. Fortunately, April hasn’t gotten off to the roaring start we saw in March, but the major firms continue to cut headcount.
According to the New York Times,
The sharp and continuing increase in unemployment suggests that even if the downward spiral is beginning to level off, job losses are likely to keep piling up for the rest of this year and into 2010.
As the American Lawyer notes, roughly the same number of people are currently employed in the legal sector as were in October 2003 – five and a half years of growth gone in six months. 2,700 jobs were lost in the US legal sector in March alone (note that is a net number, so for that, and a whole host of other reasons, it doesn’t correspond to the 3,677 we tracked as laid off by major firms last month).
The effects on our little corner of the economy are slowly getting mainstream attention. In a Times editorial, Adam Cohen notes that lawyers may not be the most-sympathetic victims of the recession (really, can’t we call it a depression yet?), but they are the canaries in the coal mine that could force a change in how the industry works. He’s predicting lower salaries and law-school-curriculum reform.
As of early Friday afternoon, there were a total of 675 layoffs for the week, up 47% from last week’s 459. Details, analysis, and context, after the jump.
Hogan & Hartson was forced to admit its “voluntary” offer was a flop: of the 250 people to whom voluntary severance was offered, only 28 accepted. As we predicted on Law Shucks, voluntary offers are doomed to fail and will inevitably be followed by layoffs. The firm was forced to cut 93 staff. Hogan also has a unique, tiered compensation model, with associates in some office on a 1,950-hour track and some on 1,800. In a further cost-cutting measure, a number of associates will be forced into the lower-hour/lower-pay tier. We do give the firm credit for its optimism – the voluntary layoffs in February effectively gave staff six additional weeks’ severance – and the firm has been relatively forthcoming about its actions. Hear that, TexasLaw Shucks.
In an interesting vote, at least 75% of Clifford Chance partners voted to trim up to 15% of the partnership. That means up to 92 of the firm’s 613 partners at the end of 2008 are at risk. I’d really like to see the actual numbers on this – considering lawyers’ inability to see their own flaws, I wouldn’t be surprised at all if some percentage greater than 85 approved the measure. As the firm starts looking at what particular cuts will be made, Legal Week reports that the firm’s US practice may be particularly at risk.
Over at Mayer Brown, they’re also taking a look at leadership and whether the firm is set up to fail. The firm has laid off 223 people (101 lawyers – good for #10 on the lawyers-only ranking – and 122 staff) in three tranches since November – 135 this week alone (45 attorneys, 90 staff). Despite a nine percent revenue increase, there have been a slew of partner de-equitizations and defections, not to mention suits against the firm. Firm chairman James Holzhauer is stepping down after less than two years on the job, but no successor has been announced. That’s in part due to the operations problems caused by having three heads (there are also two vice chairs) running the firm from two continents.
Other significant layoffs this week include: Reed Smith (100 – 26 lawyers, 74 staff), Locke Lord (135 – 45+90, which leaves Winston & Strawn as the only Chicago firm without announced layoffs), Fried Frank (99 – 41+58) and Stroock (50 – 19+31).
In addition to layoffs, freezing ( or cutting) salaries, and reduced schedules, this week we got word of a new cost-cutting opportunity that is being kicked around: office space. According to the ABA Journal, firms are considering putting associates in cube farms, downsizing partner offices, and going to a one-size-fits-all model.
Maybe it’s not all bad. Bitter Lawyer finds reasons to be jealous of the laid-off
Tracker Errata:
Similar to Hogan & Hartson, Lovells ended up laying off only 79 of the 96 with whom it was originally in a redundancy consultation. We’ve reduced the counts on the original entries for both firms and, in Hogan’s case, added a new entry for this week’s layoffs.
All told, 675 people were laid off from major law firms this week: 212 attorneys, 463 staff.
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That's 5 years of growth gone in 6 months (as opposed to five and a half)
That's why I went to law school, not business school. That and the intro to accounting class only being offered at 8:30 a.m. MWF.
Thanks for the correction.
Well… maybe the measly three year mugging at law school doesn't merit so many millions after all. At least medical doctors cure people and practise an actual science. The PhDs have always had it hard, working long hours with zero job security (before the 10 year long road to tenure) for almost no money.
The least educated out of the three blue blooded professional streams: PhD, MD and JD are the lawyers. They also make the most money, usually by suing for damages over coffee being too hot or ice cream being too cold.
Well suck it up friends. A lot of people die when there is a famine and so do a lot of animals and we feel bad for them. But if malaria carrying mosquitoes were to die in the famine, no one would care.
On W&S being only firm in Chicago without announced layoffs … compare W&S's total associates in the Chicago office from their Nalp form as of 2/1/09 (277) with the total number of associates in the Chicago office from a search on their website (217). I'm guessing that 60 people didn't voluntarily leave over the last two months. Just sayin'. But I'm not at W&S, so I have no idea whats going on there.
To be a depression, there must be a steady decrease in GDP for a year or more. And the total decrease must be 10% or more. But, hey, maybe we're headed there…
W&S also cut support staff end of 2008 and again in January '09.
And, to some degree, in February '09. W&S brought in temp-to-hire in Chicago in late January with an intention to train up and hire on the right person. The word came down from on high by the 20th to cut all contractual, regardless of need.
And again in April!!! I was one of the cuts!!!
You should check your facts, Winston & Strawn did have several layoffs in two consecutive weeks. They have been offering buyout packages to secretaries who are 55 years and older, been employed over 15 years. They are letting go wonderful, highly experienced people. They are not the same law firm they were years ago. It is all based on greed. Where are all these secretaries supposed to work if law firms keep letting people go? This does not help with the economic recovery plan it only makes the country dive deeper into a recession.
We'd be happy to inquire further. Send us an email tips at lawshucks dot com and we'll look into it. There hasn't been anything reported from the firm yet.
And they weren't going to…. they try to keep everything under wraps… like i said before this is a corrupt law firm!