Would nervous associates jump at the opportunity to work reduced hours at reduced pay if it meant their law firms would forgo layoffs?
Officials with the Project for Attorney Retention (PAR) and several legal consultants think so. They are recommending that law firms take a serious look at implementing reduced-hours programs as a way to manage through the flagging economy while protecting their reputations in legal circles.
"I think if firms aren't thinking about such a program, they really should," said Charles Santangelo, a consultant with Hildebrandt International. "A number of firms are already talking about it, and it's happening for some paralegals. It may or may not work, but they should consider it."
The PAR -- an initiative of the Center for WorkLife Law at University of California Hastings College of the Law in San Francisco -- has long advocated for reduced hours as a way for law firms to retain attorneys, particularly women and minorities.
But PAR officials say the economic downturn has created an even stronger business argument for creativity and flexibility in attorney schedules.
A growing number of firms have laid off attorneys in recent months because they lack enough work to keep them busy.
The reduced-hours idea is fairly simple. Associates working reduced hours would see corresponding reductions in their compensation, which would help firms cut their costs without cutting associates loose, said PAR Research Director Linda Bray Chanow.
For example, if an associate making $200,000 a year agreed to a 30 percent reduction in hours, the firm would save $60,000 in compensation costs during the course of the year, Chanow said. If the law firm doesn't have enough work to keep everyone busy anyway, it wouldn't face staffing shortfalls because of the new hours structure, she said.
"I think the economy is giving law firms opportunities that [they] may have felt they didn't have before," said PAR Assistant Director Cynthia Thomas Calvert. "This is not an accommodation for mommies. This is a business initiative."
LOOKING AT ALL OPTIONS
Linda Headley, a shareholder in the Houston office of San Francisco-based labor and employment firm Littler Mendelson, said that her firm has stayed busy in the economic downturn and hasn't had to consider attorney layoffs.
But she said she would advise firms facing layoffs to try a reduced-hours program as an alternative.
"If we were facing that situation, we would look at all our options to preserve talent. It's hard to get talented lawyers, and I think it's worth doing everything you can to salvage those relationships," she said.
It remains to be seen if the reduced-hours schedule idea will catch on with law firms.
Chanow said that the PAR does not have any statistics on the number of firms introducing reduced hours as a response to the economy, because the trend is fairly recent. She did say that a growing number of firms have contacted the PAR since this summer to ask about reduced hours and how such a program could be implemented.
Michael Nannes, chairman of Washington, D.C.-based Dickstein Shapiro, said that although many firms establish and utilize flex-time programs to assist attorneys in accommodating changes in life circumstances, he doesn't foresee a wave of law firms looking to reduced hours solely as a cost-savings move.
The reality is that having associates work fewer hours doesn't provide the same level of savings as layoffs, said Nannes, who is also on PAR's advisory council.
For example, it costs a law firm less to have three associates working 2,000 than to have four associates working 1,500 hours because the law firm must pay for office space and benefits for that fourth, reduced-hours associate.
That added cost is eliminated in the layoff scenario. On the other hand, Nannes said, clients value continuity among attorneys, and reducing associate hours would help protect the continuity that is disrupted by the layoff process.
EYEING THE REBOUND
The idea of rolling back hours instead of dumping associates has benefits that go beyond immediate cost savings, Chanow said.
When the economy rebounds and legal work picks up, the attorneys who remain at firms that laid off associates will find themselves stretched thin. Those firms will be forced back into the costly process of quickly hiring associates. Firms that have associates working on reduced-hours schedules, however, can simply reinstate full hours to meet the demands, Chanow said.
"This [economic downturn] is cyclical," she said. "What happens when you see a slight spike, and the remaining associates can't handle it?"
Reducing associate hours in lieu of layoffs will also help firms maintain ethnic diversity, since the junior attorneys being laid off tend to be the most diverse, she said.
Furthermore, firms that try to accommodate associates instead of cutting their jobs are likely to earn more loyalty and respect from employees and build up a solid reputation in the legal community, Santangelo of Hildebrandt said.
"What does it say about a firm's culture when it lays off associates in order to maintain profits per partner?" he said. "Those firms that make serious attempts to keep attorneys are going to see that loyalty returned."
Retaining associates instead of laying them off also will help the firm in its recruiting efforts down the line, since potential hires are likely to note how the firm has treated attorneys in the past, Santangelo said.
But with so many firms resorting to layoffs lately, Nannes said cutting attorneys isn't likely to blemish a firm's reputation as deeply as in the past.
"Frankly, with what's going on today, I don't think that layoffs are quite so stigmatizing," he said.
FIGHTING THE STIGMA
For all the benefits reduced-hours programs may bring to law firms, there are several potential problems with the idea.
First, clients may feel that they aren't getting as much value for their legal dollars if a larger number of associates rotates in and out of their matter because they are working reduced hours, said Douglas Richardson, a consultant with Altman Weil.
"There is the issue of, 'Am I paying to bring more associates up to speed as a result of their hours structure?' " Richardson said.
Secondly, convincing attorneys to work reduced hours may be the biggest challenge of such a program because of a perception that working less than a full schedule is a career killer.
That stigma is highlighted by the reality that nearly every law firm has a flex-time work policy on the books, but usage is generally low.
A 2008 survey by the National Association for Law Placement found that 5.6 percent of lawyers worked part-time, and 74 percent of those were women.
Calvert, the assistant director of PAR, said that the stigma associated with part-time lawyers is a serious issue that needs to be addressed by any firm that initiates a reduced-hours program. "It would take a very frank conversation with associates to communicate that this isn't a career-ending move," Calvert said.
MAKE IT MANDATORY?
One way to get around the reluctance of associates to work reduced hours is to make the program mandatory, said Richardson, the Altman Weil consultant. That would eliminate the concern among associates that their law firm is using such a program to weed out attorneys.
Firms could make reduced hours mandatory for associates working in slow practice areas, he said. But PAR is advocating for law firms to initiate voluntary programs.
Richardson said another way to make associates more comfortable with working reduced hours is for firms to lay out the criteria under which associates would return to full hours. If associates don't have a reasonable understanding when the firm will roll back reduced hours, they would likely be wary of participating.
Associates may also be more willing to accept reduced hours if equity partners make it clear that they are sharing the pain by capping profit payouts.
Additionally, associates looking for more balance between work and life may not see reduced hours as a bad thing.
"A lot of associates have said privately that they would gladly take 15 percent off their income for 15 percent more free time," said Dickstein Shapiro managing partner Nannes. "But they don't say it openly, because they are afraid of looking less committed."
Of course, asking associates to work fewer hours may not be enough of a cost savings for firms that are facing deep shortfalls, said Headley, the Littler Mendelson shareholder. Headley said she would not recommend reducing associate hours more than 30 percent, because it would create too much of a financial hardship for the attorneys and could hurt morale.
"Does 20 or 30 percent do enough? If associate work is down 50 percent, [reducing hours and compensation] probably is not going to be enough to stem the tide," she said. "It depends on how bad the situation is. It may be too little, too late."
