We’ve reached the halfway point of what is by far the worst year for law firm layoffs.
All told, 125 major law firms have announced or had confirmed layoffs. The combined total is 10,723 people, 4,015 of which are attorneys and the balance, 6,708, are staff.
After the jump, we go into excruciating detail, complete with charts (and our first Venn diagram!).
Layoffs ramped up in January, February, and March, then plummeted in the second quarter. The pace slowed (relatively speaking) in April and May, with more than 1,000 people laid off in each month. In June, layoffs slowed even further, likely the result of the arrival of summer associates and the runup in the stock markets.
This year has been a tale of two quarters. The first quarter was marked by unprecedented layoffs seemingly on a weekly basis, then the second quarter was markedly lower. February and March combined for almost 60% of the total layoffs this year, 73% with January.
So which firms were laying people off?
Based on 2009 numbers only, the top ten list looks pretty familiar.
The firms are geographically diverse (given the limited universe of BigLaw, which is dominated by US and UK firms).
There are four UK firms (A&O, DLA Piper, Clifford Chance, and Linklaters) and six US firms. Of the US firms, only one is based in New York (White & Case), two are from California (Orrick and Latham), and there is one each from Chicago (Baker & McKenzie), Philadelphia (Morgan Lewis), and Tampa (Holland & Knight).
One thing the firms do have in common, though is size.
Based on the American Lawyer’s Global 100, these are some of the largest law firms in the world by number of lawyers and revenue (data as of October 2008 – see below for analysis based on the more-current, but US-centric, AmLaw 100 and AmLaw 200). By number of lawyers, the firms range from Baker & McKenzie at #1 with 3,626 down to Orrick at #39 with 923 lawyers. Similarly, by total revenue, the firms range from Clifford Chance at #1 with $2,660,500,000 gross to Holland & Knight at #51, with $612,500,000.
Put another way, of the ten largest global law firms by revenue, six are also on the top ten list for number of people laid off. Of the ten largest by total number of lawyers, all but two are among the top ten list for layoffs (only Jones Day and Freshfields, neither of which has had any reported layoffs, don’t make the latter list). Further, six firms meet all three criteria: most revenue, most lawyers, most layoffs.
Could there possibly be anything better than a Venn diagram to show those overlaps?
Of the ten largest law firms by global revenues, only one didn’t have any layoffs: Jones Day (although in fairness, the ten people Freshfields laid off were a result of the firm closing its Bratislava office). It’s almost the same result when looking only at the US market. Of the top ten firms by gross revenue on the Am Law 100, Jones Day and Greenberg Traurig are the only firms without layoffs, but neither Skadden nor Weil Gotshal has laid off attorneys.
62 firms in the Global 100 have laid people off, ranging from Allen & Overy’s 462 down to a UK trio tied at ten: Freshfields, Eversheds, and Ashursts. The Global 100 account for 8,120 of the 10,723 people laid off by law firms this year (75.72%). Those larger firms cut lawyers slightly more aggressively than smaller firms. 3,207 lawyers were laid off by the top 100 law firms, which constituted just under 79.9% of the total number of lawyers laid off. The top firms laid off 4,913 staff, which was 73.2% of that total.
For the most part, layoffs in the Global 100 correspond to the firms’ revenues.
The top ten firms by revenue accounted for 2,580 layoffs (31.7%) and the numbers go down from there for the most part. The fourth decile (nos. 31-40) is slightly larger than the third, due to the presence of Orrick. Similarly, Holland & Knight and Pillsbury are in the sixth decile, which had more layoffs than the fifth. The real outlier is Fish & Richardson, which despite being in the bottom 10 by revenue, has laid off 190 people.
But those numbers are based on gross revenues and we all know bigger isn’t necessarily better. Of the top ten firms on the Global 100 by revenue per lawyer, only four have laid lawyers off, and one of those is Quinn Emanuel, which laid off approximately six in addition to unconfirmed stealth layoffs (but denies all of it while admitting to staff layoffs). The other three firms in the Global 100 with the highest RPL and layoffs are Sullivan & Cromwell ($1.5 million RPL).
Turn that analysis to the US, and the results are even more stark. Of the top ten firms in the US by RPL, only Sullivan & Cromwell (30) and Cravath (25) have laid off lawyers, and Simpson Thacher (20) has laid off staff. (Note that we used RPL for all firms in the top 200, so Munger Tolles, Williams & Connolly, and Irell & Manella bump Quinn Emanuel (as above), Skadden (80 staff laid off), and Milbank (49 lawyers, 40 staff)).
Higher RPL has a pretty strong correlation with a firm’s ability to avoid layoffs.
Surprisingly, though, there is less correlation between Profits Per Partner and avoiding layoffs. Five of the top ten American law firms by PPP have laid people off.
That’s it for what has been an interesting six months. For more detail, we have regular weekly and monthly writeups that are much closer to the events. They also cover the other law firm cost-cutting measures, like deferrals, salary reductions, and the like.
All of the layoff data are from our Layoff Tracker. The AmLaw 100, AmLaw 200 and Global 100 are from American Lawyer.
Of course, we’re trying not to be all about the numbers, so don’t miss one actual laid off associate’s perspective, in the Laid Off Diary.