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Layoffs? What Layoffs?
The Snark tries to figure out why some Big Law firms don't want to fess up to economy-driven layoffs
Fulton County Daily Report
March 12, 2009
Big Law is getting much smaller these days, literally.
Fewer lawyers and staff work at Big Law today than yesterday, or last week, or last year. Given the state of the economy, this is not surprising at all. It makes complete sense that banks collapsing, credit markets freezing and general economic paralysis would hurt even the biggest and baddest of law firms.
But many of these incredibly shrinking firms refuse to fess up to the reality that the tough economy is hurting them. They are in complete denial that the reason droves of associates, staff and even partners are packing up their offices is due to any economic problems the firm may be facing. Nope. "The firm is strong! The utter decline of the economy as we know it has no impact on us. We are Mega Law, and we are invincible!"
But what about the mass exodus of employees over the past several months?
"Those sad sacks are just weak links. They were not laid off. We fired those losers for their incompetence, poor work ethic, lack of dedication, inefficiency, bad attitudes, or violations of Firm Internet usage policies."
Really?
The first step to recovery is admitting you have a problem.
Some firms have bucked up and admitted that they hired too many overpaid attorneys to bill at overpriced hourly rates for doing work that has now evaporated. Well, maybe they have not gone that far. But they have at least admitted to needing to make "adjustments in light of current market conditions and economic realities." Kudos.
Firms electing to go with a straightforward and candid assessment of the current conditions and the detrimental impact on their bottom lines also tend to opt for the dive-into-the-cold-water approach. They simply lay off 20 percent of their workforce, call it is a "correction" based on the economy, sign some hefty severance checks and call it a day.
Sure, those being laid off experience the body-numbing equivalent of diving head-first into a cold and dark lake, but then the deed is done. The rest of the employees can feel at least some relief that the adjustments do not include them ... yet, and the Firm can show its clients that it adapted and is running things as efficiently as possible.
Based on the headlines, many firms seem to have decided this may be the best way to go. But many others are still putting one toe in the cold water at a time, prolonging the pain, and pretending that water is warm.
Why not just admit you are laying people off?
As usual, my simple Cog brain cannot comprehend the complex decision-making that is behind Firms denying that they are laying off employees. But I have a couple of theories.
UTTER EMBARRASSMENT
OK, I concede that it is probably more than a little embarrassing to have to let go of the very associates you spent several thousands of dollars, and years of time and energy, recruiting. After all those lavish interview dinners, ridiculous summer associate salaries and attempts to beat out your fellow Big Law competition for the honor of "Highest Paid Least Experienced Associates" -- you hate to admit you wasted some serious cash loading up on top-tier Cogs who now have no work to do. Whoops.
Don't be embarrassed. Everyone did it. Who can really be expected to accurately anticipate their staffing needs three years in advance? Who knew Bear Stearns would cease to exist? And who can resist a little Big Law competition? You gave into the peer pressure, over-hired, over-paid and now, just admit it, you are not alone.
But don't blame the poor Cogs who were once the object of your affections by secretly firing them one at a time, once a week, for eight months. That is just silly.
And please do not try to say that these stealth firings of 10 percent of your Cogs are all performance-related. That only makes you look worse. It demonstrates that not only did you fail to anticipate your staffing needs, but you are also lousy at selecting qualified Cogs.
APPEARANCE IS EVERYTHING
Another motivation for denying layoffs is the desperate desire to appear recession-proof.
"We are a highly diversified firm with a sophisticated book of business. Other wanna-be firms may be hurt by a little global downturn, but we are not just any firm. We Are Uber Firm!"
The need to appear bigger and better than every other firm is typical of Big Law. I think it is meant to foster confidence in clients and impress potential future recruits for when it's time to staff back up. Many firms trying to keep up appearances in this downturn have blamed layoffs on the dramatic decrease in attrition rates. This one is particularly odd to me. I think the rationale goes like this:
We are not laying off employees. We are getting rid of dead weight. See, we over-hire Cogs at massive rates. Our experience, after hundreds of years of running this profit machine, tells us that we will drive away the majority of them after forcing them to churn out life-crushing billable hours, ensuring that they have no client contact for the first three years, and saving the few fun things for our partners. Our budget depends on losing at least 20 percent of them each year. What are we supposed to do when they stay too long? We must fire the weakest links!
This makes some sense. Many Cogs have discovered a new-found love for gigs they despised a mere 12 months ago.
February 2008: "I can't believe my firm has delayed matching Mega Firm's market raises. I hate billing hours doing busy-work. I bet Mega Firm gives their Cogs real work."
February 2009: "I love reviewing documents in warehouses! I'd take a pay cut of 15 percent just to continue to have the honor of doing such meaningful work, with such wonderful people and such a revered law firm. I am so glad I didn't leave to go to Mega Law."
When Cogs stick around longer than expected, there is not as much work to go around, billable hours get reduced and heads must roll. But again, how is fessing up that you hope to scare off a certain percentage of the Cogs you recruit better than just saying you had to lay off a few?
Claiming that massive Cog firings are necessitated by poor performance makes little sense to me. It's like saying "When we had more work than we could possibly handle, we kept the incompetent folks around and billed clients $230 an hour for their mediocre work product and then billed them $565 an hour for a partner to redo their work. Now that clients refuse to pay for redundant and inefficient work, we have to get rid of those previously acceptable Cogs."
But maybe denial is the way to go, and we Cogs should try a little dose of it: "I won't get fired because I am not an interchangeable Cog who can be replaced once the economy picks up. Those other punks were just lazy abusers of the Internet policy. I was heavily recruited and bring a unique skill set to Mega Firm." Sure.
Do you have dirt to dish? Do you have a column idea? Or do you just need to vent in six-minute increments? Email the Snark at snarkatlanta@yahoo.com.
