NLJ Numbers Indicate Abundant Stealth Layoffs

by lawshucks on November 10, 2009

The National Law Journal has put out its 2009 survey of the largest firms in the US, and the numbers are just about as awful as would be expected. Headcount is down pretty much across the board, with the total number of lawyers employed by the 250 largest firms back at 2005 levels, wiping out three years’ growth.

In our view, the data support what we’ve been saying all along: firms are grossly underreporting layoffs and stealth layoffs are running rampant.

After the jump, correlations and commentary.





Not too long ago we showed that relying on net changes in headcount is pointless when we broke down the turnover at Nixon Peabody. There, what appeared on the surface to be a net headcount reduction of 19 attorneys actually hid the fact that 32 associates had left and only five true lateral associates joined. The rest were acquisitions of foreign offices and hires of first years.

So when the NLJ shows that there are 5,259 fewer lawyers in the top 250 (down to 126,669 compared to 131,928 last year), keep in mind that that’s a net number. In fact, those firms had planned to bring on 6,636 new lawyers, but 2,784 were deferred. That means 3,852 of the net number could easily go over to the other side, or put another way, there are at least 9,111 fewer lawyers with any experience.

It’s also interesting how the numbers diverge from reported layoffs.

The firm losing the greatest number of attorneys was Latham & Watkins, which shed 444 lawyers. It had 1,878 attorneys this year, compared with 2,322 in 2008, for a 19.1 percent decline.

Yet the firm has only reported one layoff, 190 associates (and 250 staff) back in February. That was 12% of the associate headcount at the time, but now we see that total attorney headcount is down significantly more. We’re also to believe that a greater number of lawyers actually chose to leave the firm during the worst market in at least 15 years? Not to mention, that’s again a gross number, so it assumes that no one joined the firm to offset departures.

That’s now Exhibit A for the pervasiveness of stealth layoffs.

At least Latham reported layoffs.

In addition to Fried Frank [see below], firms with major headcount losses were Paul, Hastings, Janofsky & Walker; Dewey & LeBoeuf; Dechert; Milbank, Tweed, Hadley & McCloy; and Epstein Becker & Green.

Compare those to what’s been aggregated in the Layoff Tracker (don’t forget, you can search the raw data table by firm name).

Fried Frank has consistently been the subject of stealth-layoff rumors and during the reporting period (Oct 1, 2008 to Sep 30, 2009) announced layoffs of just 56 lawyers (plus 15 more were reported in stealth layoffs). But the firm is down 168 lawyers, or 26.4%. 112 people really found better opportunities?

Same goes for Paul Hastings, where the total reported number is a mere 44 lawyers. That’s just about the same number as Dewey, which has laid off a reported 46 lawyers, although 11 of those were from closing the Charlotte office. Milbank has become a running joke for its opacity, although the firm did confirm laying off 49 lawyers in May. Dechert can’t seem to figure out how many people to lay off, as the firm has had six separate rounds (only four of which are in the reporting period, though) totaling 107 lawyers, but at least they’re being relatively forthcoming. Epstein Becker has only admitted to laying off 23 lawyers.

So how do firms with so few layoffs have such significant reductions? Few people are departing voluntarily because there’s no place to go.  And those that are aren’t going to the most-common subsequent employer: other large law firms. They’re also not going inhouse, because corporations started their hiring freezes long before firms started laying people off. Sure, there’s always work at the post office, but even government work can’t be picking up all the slack.

Firms have obviously been cutting far deeper than reported and those affected are falling out of the BigLaw picture entirely.

  • Guest

    Your comment about getting a job at the USPS is flippant as even the USPS is laying off people. What is also missing are all the layoffs at the smaller firms which fly under the Big Law radar tracking system. In the firm I worked at 3 associates and 2 paras, including me, have been laid off. And let's not forget all the 'contract' attorneys and paras who have been laid off and which never showed up on the website of the firms.

    Your posting is far too limited to reflect the true nature of what has happened to the legal profession since the 'great implosion'

  • Guest

    Your comment about getting a job at the USPS is flippant as even the USPS is laying off people. What is also missing are all the layoffs at the smaller firms which fly under the Big Law radar tracking system. In the firm I worked at 3 associates and 2 paras, including me, have been laid off. And let's not forget all the 'contract' attorneys and paras who have been laid off and which never showed up on the website of the firms.

    Your posting is far too limited to reflect the true nature of what has happened to the legal profession since the 'great implosion'

  • Bill Brasky

    Also keep in mind that in addition to the stealth "under-reporting" of law firm layoffs, some firms that have not reported at all have been stealthing this past year (such as 2008 Top 10 PPP firms like Boies, Paul Weiss, etc.) I'd like to see some across the board attorney headcounts for these places so we can see for ourselves.

  • Bill Brasky

    Also keep in mind that in addition to the stealth "under-reporting" of law firm layoffs, some firms that have not reported at all have been stealthing this past year (such as 2008 Top 10 PPP firms like Boies, Paul Weiss, etc.) I'd like to see some across the board attorney headcounts for these places so we can see for ourselves.

  • unioninlawfirms

    Your blog is important. The law firms are grossly under reporting the lay offs. They really began in 2007 well before the official financial collapse in September 2008.

    Bill, that's so true – the smaller firms are completely hiding under the radar – they lay off the most.

    Then there's the performance evaluation harrassment technique before "laying off" anyone. If they can identify a word misspelled – you're terminated – not laid off – even with years of great work. Most paralegals can't take the harrassment and just quit – which the firms love. The higher your salary – the quicker you get on the "hit list." Once they've forced as many as they can out, then comes the formal laying off. I believe the future of law firms needs a union!

    Smaller firms don't seem to do the formal press releases on lay offs.

    They don't want their clients to know they can't even pay their mortgage for the space they're in much less salaries.

    I predict A LOT of firms moving out of DC to avoid the huge cost of real estate in DC.

  • unioninlawfirms

    Your blog is important. The law firms are grossly under reporting the lay offs. They really began in 2007 well before the official financial collapse in September 2008.

    Bill, that's so true – the smaller firms are completely hiding under the radar – they lay off the most.

    Then there's the performance evaluation harrassment technique before "laying off" anyone. If they can identify a word misspelled – you're terminated – not laid off – even with years of great work. Most paralegals can't take the harrassment and just quit – which the firms love. The higher your salary – the quicker you get on the "hit list." Once they've forced as many as they can out, then comes the formal laying off. I believe the future of law firms needs a union!

    Smaller firms don't seem to do the formal press releases on lay offs.

    They don't want their clients to know they can't even pay their mortgage for the space they're in much less salaries.

    I predict A LOT of firms moving out of DC to avoid the huge cost of real estate in DC.

  • Guest

    Bill, since it it small and easy to do, as an example of what you mentioned, I took a quick look at Boies’ website and they show about 212 attorneys listed, down significantly from the 250 they presented in their reported headcount for their 2008 rankings. That’s over 15%, are we to believe that ALL of these people packed up and took other opportunities in a historically awful legal industry job market? Yet they hold themselves out to have had no layoffs garnering praise from legal websites and publications. Does anyone else smell a stealthy rat? I would like to see 2008 and 2009 roster numbers for all these other purported “zero layoff” firms.

  • Guest

    Bill, since it it small and easy to do, as an example of what you mentioned, I took a quick look at Boies’ website and they show about 212 attorneys listed, down significantly from the 250 they presented in their reported headcount for their 2008 rankings. That’s over 15%, are we to believe that ALL of these people packed up and took other opportunities in a historically awful legal industry job market? Yet they hold themselves out to have had no layoffs garnering praise from legal websites and publications. Does anyone else smell a stealthy rat? I would like to see 2008 and 2009 roster numbers for all these other purported “zero layoff” firms.

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  • Shaun B

    I just counted Boies’ website and got 205, that is 7 less than you counted less than a month ago. Who leaves just before bonus time near the end of the year at law firms, must be layoffs! Happy Holidays NOT

  • Shaun B

    I just counted Boies’ website and got 205, that is 7 less than you counted less than a month ago. Who leaves just before bonus time near the end of the year at law firms, must be layoffs! Happy Holidays NOT

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