The legal tabloid AbovetheLaw.com sparked a firestorm of rumors when it reported Friday that Sutherland Asbill & Brennan was laying off 30 to 40 associates firmwide.
Sutherland's managing partner, Mark D. Wasserman, acknowledged that the 480-lawyer firm has cut its associate ranks. But he said the firm has asked fewer than 15 associates to leave, with about eight associates affected in the Atlanta office.
"As every business does, and as every law firm needs to do, we've looked at staffing and asked if we are at the right levels to be serving clients effectively," he said.
Wasserman said the cuts were across experience levels and groups. "We're looking at how we're best staffed in every practice area and location to make sure we have the right folks," he said.
The cuts were based on several factors, he said, including the slowing economy, plus associate and practice group performance. "We looked at our client base and the work people are doing to determine at all levels and groups across all offices who we need to have to provide the level of service that we want to provide to clients," he said.
The layoffs were an outgrowth of Sutherland's mid-year associate review, he said. March 31 is the midpoint of the firm's associate review year.
All associates affected by the cuts will receive outplacement assistance, said Wasserman.
He said the firm's summer associate class is "absolutely not" affected by the cuts, nor are next fall's incoming associates. "We will have the same summer and fall associates," he said, adding that the firm is not shortening the summer program.
The firm will add 31 first-year associates in 2008 and expects to add about the same next year, he said. But he added, "I do think firms are being more conservative -- and we are too -- on the hiring front."
Sutherland received some criticism from posters on the Above the Law blog for not communicating the news of layoffs to its staff and members.
Wasserman said the firm has been telling employees and partners about the cuts -- but not with a firmwide e-mail. "E-mail is difficult," he observed, noting the propensity of such e-mails to get forwarded to legal gossip blogs.
"Practice group leaders and partners are out there talking to associates," he said, adding that the firm's leadership started holding "small group and individual conversations" last week. "We started that process before the blog hit Friday. That probably added to the blog situation," he said.
Legal recruiter Melba Hughes said law firms are generally reticent about layoffs.
"In the business world, there is a perception that this happens and is standard operating procedure and someone talented could have been laid off. In law firms, they haven't fleshed that out yet," she said. "Some of their silence has to do with wanting to protect the interests of the people being laid off."
Hughes said other law firms are feeling the same pressures in the current economy. Last year's pay hikes, which pushed starting salaries at many Atlanta big firms to $145,000, have compounded the difficulties, said Hughes, since higher billing rates can further soften demand for legal services.
"I think we're going to see law firms tighten their belt throughout the region. It's a natural course of events given the period we've just gone through," she said.
That could mean law firms reduce head count through layoffs, attrition, more cautious hiring and "by looking for new and creative ways to manage their workloads," said Hughes, which could mean using more contract and staff attorneys instead of partnership-track associates.
Associate pay is even higher in Sutherland's offices outside of Atlanta; starting salaries in Washington, New York and Texas, where the firm has Houston and Austin offices, rose to $160,000 last year.
Wasserman acknowledged that high associate salaries make the slowdown tougher for big law firms, but said Sutherland did not consider cutting associate salaries in response to the softer market for legal services. "I think you won't see any increases -- and more and more firms have gone to backend loaded compensation systems -- but you're not likely to see decreases. It's a competitive marketplace for legal talent and it would be hard to compete with a reduction in compensation," he said.
"We're seeing more pushback from GCs across the country on rates and what they should be paying and increases in those rates," he added. "We have to be responsive to our clients and provide the service they demand at rates they think are fair and reasonable. It's a constant discussion and not one that's going to get any easier."