You Call This Hype?

Greg Lambert at Three Geeks and a Law Blog questions whether the layoff news we and Above the Law report is more hype than fact. What got him wondering was a recent ATL post about stealth layoffs at Nixon Peabody. The firm also had a confirmed round of 56 people laid off in February (20 lawyers, 30 staff).

To support his claim, he compared Nixon Peabody’s February roster with its current and identifies a net loss of 19 attorneys, and cautions readers against “buy[ing] too much into the hype of secret layoffs without digging a little deeper into the facts surrounding the comings and goings of these attorneys.”

Above the Law has already responded on the issue of reporting stealth layoffs.

After the jump, we do exactly the sort of digging Greg recommends, and encourage you to draw your own conclusions.

First off, we commend Greg for the brilliant idea of taking these firm snapshots. We’ve contacted him about getting access to more so we can do further analysis like this.

We’ve also never said that layoffs are dispositive of a firm’s health. We realize there is also hiring going on, but in this environment, hiring and firing don’t correlate particularly well. It’s not like firms are hiring to offset normal attrition. What they’re doing, which is demonstrated by the data below, is trying to “trade up.”

We’re focusing on associates here. There are too many variables for partner moves and no real way to track down non-lawyers. Conflicts attorneys, contract attorneys, and counsel are special cases, and there weren’t enough to provide relevant information anyway. But to level set, Greg reports a net loss of seven partners (eight hires, 15 departures), a net loss of six “others” (six new, 12 departures), and a net gain of six paralegals (12 new, six departures).

For associates, there are 26 new, compared to 32 departures.

Of the 32 departures, here they are broken down by year of admission. More than half (19 of 32) were admitted within the past five years.

As far as practice area goes, 15 of the 32 (47%) were in some form of litigation practice. Corporate-type practices were next-hardest hit, but that’s still just five of 32.

Remember, Greg’s conclusion is that “there is still movement within firms.”

It’s not at all the kind of movement he thinks, though.

All 32 departed associates were from US offices. 12 of the 26 additions were in Paris (10) and Shanghai.

Only New York had significant numbers of departures (13) and arrivals (6).

So the largest chunk of the additions are from adding foreign practice groups. That doesn’t counterbalance layoffs of US lawyers.

Know what the real killer is, though?

Of the 14 additions in the US (again, against 32 departures), nine of those were admitted in 2009 – so almost 65% of the apples-to-apples hiring is just the arrival of the first years.

All told, 32 US associates have departed Nixon Peabody and been replaced by five true lateral hires.

So as Greg cautions, dig a little deeper into the comings and goings… and you’ll find exactly what we and ATL have been saying all along (again, with the same caveat Greg took, which is that this is based on one unscientific survey) – firms are laying people off in greater numbers than reported, hiring has not picked up yet, and that layoffs are one indicator into a firm’s financial wellbeing and business mindset.

But here’s the really sad part of the story.

16 of the 32 still list Nixon Peabody as their employer with the bar of the jurisdiction in which they’re listed as practicing. 10 more list no employer and/or what appears to be a home address. One appears to be inhouse, two are at small firms, one is at a midsize firm, one is at a district attorney’s office.

Exactly one reports being employed by another major law firm.

Related posts:

1. This Week in Layoffs – 10/23/09
2. NLJ Numbers Indicate Abundant Stealth Layoffs
3. Don’t Believe the Hype
4. This Week in Layoffs – 6/12/09
5. This Week in Layoffs – 9/25/09