This Week in Layoffs – 6/12/09

Pic: U. Chicago

That’s it? We’re looking for that one perfect week of no layoffs and we lose it to a Tennessee firm and two UK firms? So much for midsize firms being a safe harbor.

The dream of a week without layoffs lives on. Instead, we’ll catch up on the regular activity. After the jump.

The trend of initial jobless claims declining continues, with new applications down to January levels. Same old song and dance, though, as total unemployment continues to climb, setting a record for the 19th straight week.

Businesses are slowing staff reductions as signs emerge that the worst recession in at least five decades may end in the second half of 2009. Still, economists in a Bloomberg News survey predicted the unemployment rate will climb to 10 percent by year-end and restrain consumer spending, muting any recovery.

That’s pretty much in line with the trend in the law-firm sector, although we might have our first green shoots.

Layoffs

Back in March, we reported that every major Chicago law firm had laid people off, other than Locke Lord, which promptly laid people off a week later, and Winston & Strawn, which has not had any reported layoffs but we’ve been keeping an eye on them since January due to reports of stealth layoffs.

Now things might be looking up. The National Law Journal reports that Skadden, Cozen O’Connor, and Nixon Peabody are all hiring in Chicago. Skadden has laid off 80 staff attorneys but no associates.

Skadden, which has its third-largest U.S. office in Chicago, has flexibility in the number of additional lawyers it could post in the new office, said [Skadden real-estate partner Marian] Wexler, who declined to specify how many new attorneys might be coming on board. In the eight floors that Skadden will occupy in the new building, the firm also has a new cafeteria from which it will not only serve meals, but also provide food for meetings, allowing it to reduce catering costs, she said.

So there’s no actual confirmation that Skadden is hiring, just that they’ve taken more space.

Cozen has laid off 61 staff, and will be moving into larger space next April (one of Skadden’s vacated floors, as it turns out). Tia Ghattas, the firm’s managing partner in Chicago says the firm is “actively recruiting,” and in particular is looking for corporate lawyers and commercial litigators who “already have books of business.” Who isn’t? And that’s also not likely to mean they’re interested in the associates who have been affected by recent events.

Finally, the piece turns to Nixon Peabody. There might actually be a real sign of life there:

Nixon Peabody earlier this month moved into a new office building at 300 South Riverside Plaza, nearly doubling its Chicago space to 32,676 square feet. The firm has 22 lawyers there now and wants to add 15 to 20, said Stephen Rudisill, who leads the office. The firm opened its doors in the city in 2007 with a group of intellectual property lawyers.

“Chicago is a major market in the country so [the firm management would] like to add some of the other practices here,” Rudisill said.

While this series focuses on law firm layoffs, the hardest-hit legal employer this week were the South Florida County Clerks’ offices. At least 259 people have been laid off from Broward, Miami-Dade, and Palm Beach counties.

All in all, this was a much-appreciated quiet week in law firm layoffs. Especially for those trainees at Freshfields who didn’t get a conversation, just a voicemail.

Deferrals

There were many more salary cuts this week, but deferrals come first because of who joined the bandwagon.

Cravath has brought start-date deferrals into the highest-reaches of firms. At least they did it with style. The deferral is higher: $80,000, compared to the previous high-water marks of Weil Gotshal and Latham, but Cravath has absolutely no requirement that deferees actually do any work. They’ll also get health-care coverage (not clear if it’s premium reimbursement or brought on the Cravath plan) and $1,000/mo toward loan repayment. THAT, friends, is how to defer people. With all those 2009 deferees (as much as half the class) stacking up, the class of 2010 is getting pinched, too. But they’re not getting as good a deal, presumably because they have more “opportunity” to find an alternative arrangement. They’re going to have to scratch by on $65,000 (plus loans and healthcare).

A number of Connecticut firms have also deferred associates, but obviously not on the same scale.

Salary Cuts

First, we had the traditional salary cuts.

Pillsbury cut salaries on a sliding scale based on utilization to date with a possibility of an earnback. Cuts ranged from 5% to 20%, with no cut for those who had hit at least 90% of the firm’s 1950-hour target (730 hours from January through May).

Bryan Cave cut salaries by 10% across the board, effective immediately, except in Missouri which seems to have a notice requirement. Fish & Richardson wasn’t so clear, though. A number of tipsters told ATL that salary cuts were looming, but firm president Peter Devlin countered, saying that he had only said the compensation was under review and if he had his way, they would go to a more compensation-based structure.

Then we saw a few other measures that have a net effect similar to salary cuts (all the pain, none of the tax benefits).

In Toronto, Fraser Milner staff and associates are being forced to take six days’ unpaid furlough by the end of the year. Not sure how that would fly in the States.

Back in the lower 48, O’Melveny has frozen staff salaries through 2010 – so no performance or seniority based raises next year, either. Assuming normal CPI escalation (a big assumption, considering no one knows whether we’re going into an inflationary or deflationary period), that’s as good as a pay cut.

Then there’s McDermott Will & Emery, which has been informed by a consultant that the firm’s benefit package is above market. They’re cutting back to whatever they consider standard.

At least the government lawyers in San Francisco get to vote on their 2% pay cut.

Numbers

132 people laid off from major law firms this week (38 lawyers, 94 staff)

308 this month (63 lawyers, 245 staff)

10,550 this year (3,944 lawyers, 6,606 staff)

Related posts:

1. This Week in Layoffs – 5/22/09
2. This Week in Layoffs – 6/19/09
3. This Week in Layoffs – 2/20/09
4. This Week in Layoffs – 10/23/09
5. This Week in Layoffs – 1/23/09