How Do Firms Lay Off Lawyers? Very Carefully

More attorneys than ever before are taking legal action against their former firms, says a labor and employment attorney
Laid-off workers in any industry are bound to be distressed, bitter and potentially litigious -- especially when facing the current job market. But law firms have a few added reasons to proceed with caution when they part ways with attorneys and legal staffers. Law firms generally have far less experience with mass layoffs than their corporate counterparts, and attorneys are also more familiar with their legal rights. In addition, layoffs may tarnish a firm's reputation and hurt recruitment.

Karen Sloan

The National Law Journal

2009-03-16 12:00:00 AM
Attorney and staff layoff horror stories are a staple in the blogosphere these days.

Anonymous posters swap tales of stingy severance payments, trumped-up negative performance reviews and stealth dismissals.

Of course, laid-off workers in any industry are bound to be distressed, bitter and potentially litigious after a job loss -- especially given the tight employment market right now. But law firms have a few added reasons to proceed with caution when they part ways with attorneys and legal staffers.

For one thing, law firms generally have far less experience than their corporate counterparts when it comes to showing the door to a sizable group of people. Reductions in force -- as law firm leaders often call them -- are uncommon in the traditionally stable industry.

At the same time, attorneys are more familiar with their rights than the average laid-off worker, and they have shown an increasing willingness during the past decade to sue their former firms. In fact, employees have filed workplace lawsuits against several firms that dissolved in recent months.

Last, the legal community has a long memory. Layoffs can tarnish a firm's reputation and hurt recruitment, though experts say that stigma is fading, given that firm layoffs are now widespread. That grim reality was on display during the week of Feb. 9 to 13, when more than 1,000 attorneys and staffers were given their walking papers from at least 10 firms.

DOING IT RIGHT

Though the process of eliminating law firm jobs does not differ greatly from layoffs in other industries, experts say firms have good reason to make sure they dot every "i" and cross every "t" before cutting jobs.

"The most important thing, frankly, is planning," said Felice Ekelman, a partner at labor and employment firm Jackson Lewis. "You want to do only one layoff, and you want to do it right."

Doing it right not only means conducting layoffs in accordance with state and federal labor laws, but it also means treating departing staff and attorneys with dignity and fairness. Such treatment goes a long way in maintaining positive relationships with former employees, and helps bolster the morale of workers who remain at the firm, said several attorneys who counsel companies on workforce reductions.

"Every one of the people law firms are laying off could become clients down the road or could become sources for referrals," said Roy S. Ginsburg, a solo practitioner in Minnesota who also provides outplacement services to law firms. "A lot of attorneys don't realize how important it is to retain a good relationship [with attorneys who have been laid off]. I don't know why. It seems pretty obvious to me."

Like employers in other industries, downsizing firms must comply with an array of state and federal labor laws, including the Worker Adjustment and Retraining Notification Act (WARN) and the Age Discrimination in Employment Act (ADEA).

Firms without a labor and employment practice are wise to hire such an attorney because WARN laws are intricate, said Gerald Hathaway, a Littler Mendelson shareholder who has counseled international law firms on layoffs at their U.S. offices. Former attorneys and staffers are suing recently dissolved firms Heller Ehrman and Thelen under WARN, which requires employers to provide 60 days' notice of a mass layoff.

One of the most effective ways law firms can protect themselves from litigation brought by a laid-off worker is to develop solid criteria for how to select those whom they let go, and to apply that criteria in a consistent manner, Ekelman said. Firms may look at seniority, practice areas, performance reviews or any number of other factors, but they should maintain documentation that supports those layoffs decisions.

"Selection criteria are very important, from a legal perspective," said Jonathan C. Wilson, a labor and employment partner at Dallas-based Haynes and Boone. "Our advice is to have a uniform criteria that is documented and followed by everyone involved."

ASSOCIATES ARE SUING

After the layoff criteria are established, Hathaway said firms should conduct a statistical analysis to ensure there is not "disparate impact" -- meaning no one group, such as women or minorities, is affected disproportionately. Ekelman suggests to clients that they form a small review committee to analyze layoff criteria and decisions to ensure that they are applied fairly and consistently.

This is increasingly important because more attorneys than ever before are taking legal action against their former firms, Hathaway said.

"Ten years ago, associates wouldn't sue [law firms] because it hampered their employment prospects," he said. "We're seeing more of that now. It's a new phenomenon."

Indeed, Nixon Peabody; Dechert; and Skadden, Arps, Slate, Meagher & Flom are among the major firms sued in recent months by fired associates.

Beyond the legal issues, labor and employment attorneys encourage their clients to consider the human element of downsizing.

For example, layoffs are likely to hit associates -- who, along with staffers, have been bearing the brunt of job cuts -- especially hard.

"This is tough for associates, because it could be their first real failure in life," said Ginsburg, who provides outplacement assistance to laid-off attorneys. "A lot of them went to top colleges and landed good jobs, and this is the first real setback."

Associates may also feel a little panicky at the idea of no job and looming law school debt, Hathaway noted.

Of course, telling associates or staffers that they are being let go is an unenviable task, but the experts say there are several rules to making that conversation as straightforward and respectful as possible.

Managers should explain to the worker why they are being let go, without delving into too many specifics. Departing employees should be given all the information they will need in the short term, such as when they are expected to leave, the basics of their severance package and how long they will have access to their firm's e-mail and computers. Most importantly, laid-off workers should leave their layoff meeting with a point of contact at the firm who can answer any additional questions.

NO 'ONE SIZE FITS ALL'

Whether firms should allow associates to work for several more months while they look for a new job or have them leave the office immediately depends on the circumstances and the culture of the firm, the labor and employment lawyers said.

"What makes this a challenge is that there is no 'one size fits all,'" Ekelman said.

Another issue is length of severance. While WARN requires most employers to provide 60 days of pay and benefits, firms may opt to compensate laid-off workers for a longer period of time.

"I think firms should go beyond what the WARN act requires," Ginsburg said. "It's going to take a long time to find a new job, especially in this market."

Some firms take the added step of providing outplacement services for the associates and staffers they lay off, which several labor and employment attorneys said is a good idea. Associates who landed at law firms though the traditional law school-aided process have never had to find a job on their own, Ginsburg noted.

"If you don't have people skills and you don't know how to network, you're going to have a tough time finding a new job," he said.

The role of outplacement counselors is not to find laid-off workers a new job. Rather, it's to offer support to workers and help them develop a strategy for finding their next job. Initially, that can mean being something of a counselor -- helping laid-off workers come to terms with their situation. Outplacement services may also involve helping those workers explore careers outside of law.

One of the final steps in carrying out an effective layoff is delivering the message to those who are still at the firm. That conversation should happen only after the all the laid-off workers have been informed. Ekelman said firms should be careful not to promise there won't be more cuts in the future. At the same time, firm leaders should reassure remaining workers that layoffs don't mean the ship is sinking.

"The people who stay need to be assured that there are still opportunities for growth," Wilson said.