This Week in Layoffs – 7/24/09

by lawshucks on July 24, 2009

There's always work at the post office.

There's always work at the post office.

We may not have seen the worst yet, the last few weeks’ progress in the American economy has turned slightly for the worse this week.

Applications rose by 30,000 to 554,000 in the week ended July 18, in line with forecasts, figures from the Labor Department showed today in Washington. Claims had fallen by 93,000 over the previous two weeks. The number of people collecting unemployment insurance decreased to the lowest level in three months, also reflecting seasonal issues surrounding closures at carmakers.

To add insult to injury, first-time filers’ checks are being held up by an overburdened system, and the coffers are running dry.

Could be worse – Spain’s unemployment rate is just shy of 18%.

The constant layoffs without any expectation of hiring have had a continuing negative effect on consumer confidence. If we’re getting out of this recession, it won’t be consumer-spending driven. And it looks like there’s still some pain to come.

The economy has lost 6.5 million jobs since the recession began in December 2007 [the Law Shucks Law Firm Layoff Tracker counts lawyer layoffs from January 2008]. Economists surveyed by Bloomberg predict the unemployment rate may reach 10 percent by year-end from 9.5 percent in June, the highest level since 1983.

Slower layoff rate, more yet to come? Sounds just like the law-firm industry.

In the legal sector, the seasonal dip in layoffs isn’t the result of auto-plant closings, it’s more likely firms trying to struggle through while the summers are around.

At this point, why bother?

Because if firms are capable of anything, it’s maintaining appearances. Or at least thinking they’re doing so.


Firms are deferring associates at breakneck pace, so presumably this year’s crop will just be happy to have a job, even if it doesn’t start for two years. By then, they’ll probably have forgotten all about those first years who got laid off in the summer of ’09.

OCI for third years (class of ’10) was already non-existent and class of ’11 summer jobs are disappearing at an alarming rate, so who exactly are they trying to impress? We won’t be surprised by a slight blip in layoffs in the next week or two before the partners head to Quogue (you don’t think they can afford Hamptons proper, do you?) for the end of the summer. Then another wave in October.


Right now, it does look like the layoffs from two weeks ago were just a blip. Slightly more people were laid off by major law firms this week compared to last, but we’re still near the lowest numbers of the year.

Dechert took the headlines, when it laid off 25 lawyers, although the firm is trying to keep things under wraps this time. Really? Sixth time around and they’re finally trying to play coy? With 264 people laid off so far, they’re knocking on the door of the Overall Top 10 List. Morgan Lewis is currently holding the last spot, with 266.

Dechert does break into the rankings of total number of lawyers laid off (120, tied with Baker & McKenzie for #10). The sixth round of layoffs moves them up into a tie for third on that ranking (with Baker & McKenzie and Cadwalader).

With additional layoffs of staff and senior associates expected, look for them to move further up the rankings.

The other big layer-offer of the week was the Arizona attorney general. Maybe the cult classic had it wrong, there might not always be work at the [AG's] office.

Summer Programs

There was more activity this week in summer-program cancellations.  Milbank (LA), Ballard Spahr, Thomson Hine and Squire Sanders, were all among the firms to wake up to the 40-car pileup they’re facing with starting classes in 2010 and beyond.

Frankly, we think cancellation is an overreaction.  It would be more efficient to reduce the offer rate this summer and have significantly smaller classes next summer.  The economy will eventually turn around and it’s better to have at least a small base of people who have had a full summer to show their skills than to have to make up the entire class from OCI of third years.

We’ll have more on this soon, but firms really need to become more selective and summer programs with lower offer rates are a great start towards that.  See, e.g., Wachtell’s strict hiring standards.  Skipping an entire class only to plan on picking from what’s available for third year OCI doesn’t seem like a sound plan.

Even though they haven’t been particularly forthcoming with the information, Schulte and Winston & Strawn may be heading down that path.  Heather Milligan thinks internship programs are a better solution.

Another relatively light week.

54 people laid off from major law firms this week (40 lawyers, 14 staff)
569 people this month (229 lawyers, 340 staff)
11,319 people this year (4,260 lawyers, 7,059 staff)

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