In perhaps an overabundance of exuberance for even the faintest glimmer of good news, media are celebrating the May unemployment report. The 345,000 jobs lost for the month was half the average monthly decline for the preceding six months (and far better than expected), although unemployment was up to 9.4%. Much of the early giddiness ignored that second part, so despite some volatility, the markets ended the day basically flat. According to the report,
Job losses in professional and business services moderated in May, with the industry shedding 51,000 jobs. This compares with an average loss of 136,000 jobs per month in the prior 6 months.
More specifically, in the legal sector, just 1,300 jobs were lost in the month – from 1.141 million in the sector in April to 1.1397 in May.
We’ve chartified the trend for the visual learners, after the jump.
Bear in mind, that number is net of new hires, layoffs, retirements, etc. To the extent it represents a leveling off, it mirrors what we tracked in major law firm layoffs for the month, which were slightly higher.
Elie called shenanigans on the seemingly irrational exuberance of a 9.4% unemployment rate, and we agree. It seems a lot more like Stockholm Syndrome than green shoots. One laid off lawyer thinks that not only are there more layoffs are to come (we agree), but those laid off early have the advantage because, between naps, they’re already well into the networking and job searching.
Still, the news from both the macro and provincial perspectives is good, layoffs in the second quarter are way down compared to the first, although there still haven’t been any signs of actual growth. Baby steps. We’re still expecting waves of layoffs in August (after the summers leave), October (after OCI ends), and November (when the reality of how abysmal this year’s results are sets in).
So what did we see this week? Clearly, the big story was WilmerHale’s bumbling explanation of its stealth layoffs. It’s almost impossible to understand how the firm could fail to grasp the absurdity of its comments, but it was amusing to see a firm blithely hit on so many of the points Law Shucks calls the hypocrisy of stealth layoffs.
As if that weren’t enough foot chewing for one week, the firm also sent out a disturbing message that attorneys who left the firm for clerkships must reapply for their old jobs. What??? That’s another mindboggling change to a time-honored practice of treating clerkships as sabbaticals. Historically, attorneys who leave in good standing for clerkships are welcomed back with open arms (and, if the clerkship was prestigious enough), a nice bonus. Clerks from WilmerHale are instead being treated like they’ve quit.
Meanwhile, McDermott Will & Emery had its second round of layoffs, this time laying off 25 attorneys and 47 staff. While there were other layoffs this week, this one was refreshing for its candor. It’s been a while since a major US firm simply announced that it was laying off both lawyers and staff in significant numbers and without any pretense of performance reviews or other nonsense. Technically, Bingham is -1 for the week, too, but we’ll consider that one as “for cause.”
The other quasi-layoff is Mayer Brown’s bastardization of a secondment. We’ll be writing more about that later this week.
The National Law Journal has an interesting take on the collateral damage from all the major firms’ layoffs: lawyers who actually wanted careers in public-interest law are being squeezed out by those starry eyed castoffs who are taking the public-interest jobs as a short-term refuge.
This is going to make for an interesting result if laid-off lawyers actually do return to firms: the castoff/returnees are going to be way behind their class in career development, and the public-service agencies are going to be faced with a double whammy of being understaffed from the departures and whacked with salary expense they avoided due to the firms’ subsidies.
Firms continue to try to cut costs in non-layoff ways.
Kilpatrick Stockton and Dorsey & Whitney both went with the 10% across-the-board pay cut, which at least avoids the compression issue we raised last week. Ballard Spahr went the other direction, and implemented a new salary structure that is so compressed you could make diamonds with it. The firm is also reportedly engaged in stealth layoffs.
We do take exception with one ATL tipster, who said “last year’s bonuses were cut by 60% from the normal levels.” Bonus levels in 2007 and 2006 were not “normal” levels – those were definitely special years and bonuses reflected the firms’ outstanding results. Acting as if every new high-water mark is the new standard is hypocritical. Bonuses are supposed to reflect special results and, at least for lawyers, weren’t an “expected” component of compensation until less than 10 years ago. That being said, if firms are going to go the i-banking route and pay outsize bonuses but have an itchier trigger on layoffs, the firms should be paying higher bonuses. Still, lawyers and law firms have traditionally preferred lower volatility, which means lower bonuses and fewer layoffs.
The Numbers
Law firm layoffs
This week: 176 total – 25 lawyers, 151 staff
- Barlows Clyde & Gilbert – 49 staff;
- Dorsey & Whitney – 55 staff; and
- McDermott Will & Emery – 25 lawyers, 47 staff.
This month: 176 total – 25 lawyers, 151 staff
This year: 10,418 total – 3,906 lawyers, 6,512 staff
Don’t forget to check the May recap for more charts and a broader perspective on trends.
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jones day has been making bogus performance cuts for a few months now. quite a few partners were also quietly remade into counsel
Regarding the NY Times article about layoffs in prestigious law firms – all I gotta say is "Hurrah, welcome to MY world!" It's about time EVERYONE, including fat cats used to the good life, got a taste of what it's like for millions of regular Americans.
This depression we're in, thanks to the repubs. which fat cats adore, has treated most of us equally – just like communists – we're all suffering.