A. Challenges of the New Economy
In 2009, more people were laid off by more firms than had been reported for all previous years combined.1 Letting attorneys go in significant numbers is not something large law firms have had a great deal of experience with until recently. Standard practice in most large law firms had been to retain attorneys until a partnership decision was made. These firms did so in part because they feared the reputational stigma attached to firing one of their own; as one blog explains, the “vast majority” of prospective lawyers “turned up their noses at firms...[that] laid people off.”2
How quickly times have changed. Despite the novelty of big firms having to let their attorneys go, it still comes as a surprise how poorly some large law firms have handled the process of layoffs over the past year. To be fair, firms made these decisions under great stress and uncertainty, when the risk of total firm collapse existed and in fact happened to some, which certainly influenced the choices they made. Many firms insist that they have only let attorneys go for performance rather than economic reasons, even when it strains credulity. It is difficult to believe that a firm suddenly realized, all at once, that dozens of its attorneys had sub-par performance, particularly when some of those lawyers were recently made junior partners, or when those attorneys were in their first or starting their second year of practice.
Most analysts (and other attorneys in private conversation) recognize that these lawyers would never be let go in a stronger economy as long as they made money for employers. To their credit, some firms forced to make layoffs have stated this explicitly and expressed regret at having to say goodbye to respected colleagues. Even at firms that have been up front about the economic necessity of layoffs, however, stories abound of attorneys being given almost no notice, little or no severance, and no assistance in securing a new position. Departing associates have told of working closely with a partner for years, only to receive an email message in farewell. In a few cases, attorneys have been shut out of the firm’s computer system while they were being given the news, and others have been immediately escorted out of the building with their personal items forwarded separately by messenger. Such jarring departures, while common in investment banking and internet start-ups, had been unheard of for members of the bar in good standing whose only misdeed was that they were caught in a down legal economy.
Certainly, not all firms have handled things so poorly. Indeed, some have worked to create a “soft landing” for their attorneys who have been laid off. These efforts have typically included providing career counseling and outplacement services, offering appropriate severance packages, making office space available, and keeping attorneys’ phone lines and email accounts active.
By far, the most helpful -- and loyalty engendering-- thing a firm can do for its former attorneys is to make calls on their behalf and provide contacts who are knowledgeable about opportunities for the individual now looking. In the past, once it was decided that a senior associate was not going to be made partner, almost all large firms made an effort to place the individual in a position with a client or somewhere one of the firm’s partners was well known. While some individual attorneys have asked for and received this type of help in the past year, the courtesy has not been extended as a matter of practice to attorneys told that they no longer have a position with their firm.
There is of course no public data on which firms did what in the process of letting go of attorneys, so it is impossible to calculate how things were handled by the field as a whole. Nevertheless, it remains clear that in the face of hard times and increasing financial pressures, it is in a firm’s interest to avoid unnecessarily aggressive, and arguably self defeating, approaches to downsizing their workforce.
B. The Business Rationale: Why It Matters
As one large firm associate noted in early 2009,
I remember back in 2003, one of my colleagues was laid off from our firm, and they provided him with six months' salary and hired a professional career consultant/placement agent to help him land safely.…This firm did all the right things, including telling him that it was purely for economic reasons and not performance related. The rewards to the firm were obvious -- he joined the in-house legal team of a Fortune 50 corporation, and still looks back fondly at our former firm despite being laid off.3
The absence of far-sighted strategies on the part of some large firms in letting attorneys go exists, of course, in large part because firms are under pressure to save money—the driving force behind the layoffs in the first place. Economic conditions have changed drastically since 2003 -- firms no longer feel flush, there is no reassurance that business will increase in the near future, and fewer Fortune 50 corporations are hiring.
It seems that, in their rush to adapt to changing economic conditions, decision makers at some firms may have lost their long-term perspective. In some cases, administrators in charge of marketing and business development have made the case internally for substantive severance packages in order to maintain goodwill among departing attorneys only to be turned down by managing partners or others on the management committee.
The question remains at what cost firms make these decisions. Eventually the downturn will end. Law firm alumni will find jobs somewhere, very possibly with potential clients, and firms will get back into hiring mode. Consequently, it makes economic sense for firms to handle layoffs sensitively and to do as much as they can for outgoing employees in the midst of tough economic times.
When firms insist on claiming performance issues and treat their former employees so poorly, it not only poisons the relationship with the individual but also can quickly ruin the firm’s reputation with that individual’s former colleagues, clients, and fellow alumni. These procedures and processes -- or the lack thereof -- also mean that a firm assumes the risk of driving away future candidates and causing prospective clients to question the firm’s judgment, placing its future in jeopardy. It is difficult to see a rationale for some of the problematic things firms have done.
Accounting firms and management consulting firms have for many years invested in maintaining good relations with their former employees. They have, of course, not done so out of the goodness of their hearts but rather because it has proven to be good business. Through measures such as developing alumni networks to keep in touch and developing programs that attract alumni to remain engaged with their former employers, these companies regularly develop future business contacts and promote loyalty and goodwill that can help attract top candidates and clients in the future. The business argument that has persuaded business leaders across industries to maintain good relationships with their former employees follows.
First, attorneys already have a lifetime affiliation with a firm for which they have worked because the firm is always on their resume. When asked, as will be the case in almost any new position, alumni will of course speak more highly of the firm if their departure is handled well. The reverse is also true.
Second, the market will improve at some point, and firms will again compete for talent. It is much less expensive to rehire people who have already been trained by the firm than to invest the huge sums that firms have traditionally put into their recruiting programs or paying recruiters to hire laterals. Alienated former employees will not want to return and, even if they do, are not likely to perform at their best. In addition, any negative information about a firm will impact future law student candidates who often listen closely to the experience their school’s alumni have had with a firm. These recruiting circles are small.
Third, especially in a tough economy, it is critical to leverage relationships for business development. A firm has no way of knowing where its former attorneys will end up; and, if they happen to land in a large potential client’s office, their opinion of the firm matters a great deal. Conversely, if attorneys retain a positive view of their experience there, the firm could have much to gain.
Law firms have an opportunity to learn from corporate America and recognize that it is always good business to create a web of connections and to invest in developing positive relationships among people. Over the past year, only a limited number of law firms have seemed to understand that it is in their interest to help their attorneys land well.
C. What: Programming For Big Impact With Little Dollars
The lack of foresight many firms have demonstrated in how they let attorneys go is not only due to pressure to save money but is also explained in part by the legal field’s record of lagging behind other industries in developing and leveraging alumni networks. Some law firms have taken the lead in developing such programs in recent years, but making the case for a law firm to develop procedures to maintain goodwill with their attorneys on their departure and going forward will likely be an uphill climb in the current economy. Virtually all businesses are concerned about how to do more with less, so law firm leaders are likely to question what can be done when most are already having to make budget cuts.
Even though law firms lack the infrastructure that other industries have created, measures to maintain good alumni relations do not need to be cost-intensive. At their core, successful networks are a combination of strong communications, networking, and follow-up. As other industries have learned, such programming is all about relationships; and, while it may be nice to have money to support them, hosting receptions and other costly events is not the only option.
In fact, inviting alumni to a law firm social event may not be the most effective route to maintaining good relations with attorneys who have been asked to leave. In one example, associates who had been laid off received their firm’s alumni end-of-the-year newsletter, which included an invitation to the firm’s holiday party. To its credit, the firm was making clear it considered these former employees to be just like other alumni of the firm, but several of the laid-off attorneys expressed incredulity that the firm that fired them now wanted to celebrate the end of the year with them. Further, the firm seemed to lack sensitivity when the letter it sent went on to tout how successful the firm had been that year -- one in which it also laid off 55 attorneys, all of whom were receiving this news.4
Other kinds of interaction could prove to be both more productive as well as less expensive than formal events. Particularly when administrators within a firm have seen their responsibilities expand because fewer people are left to do the work, the measures a firm is most likely to adopt are those that will not require much additional work. A few lowcost examples of steps to maintain good relations with law firm alumni follow.
First, the loyalty-engendering practice mentioned above -- of partners giving departing attorneys contact information for those who are knowledgeable about the individual’s field and making calls on an attorney’s behalf -- costs nothing but a little time. Particularly since it has now become standard practice solely to confirm dates of employment, law firms willing to reach out on an individual’s behalf, give candid recommendations, or at the very least provide an objective reason for the departure, will stand out among their competitors.
Second, a firm can piggyback the steps it takes to develop alumni networks onto other initiatives already being undertaken. These can include incorporating alumni into client seminars and events, offering discounted continuing legal education (CLE) programs to keep bar memberships current, and inviting alumni to program events already planned as part of women’s or diversity initiatives or of particular practice areas.
Third, a firm can inexpensively create an alumni directory, keeping email addresses and other contact information updated so that individual alumni can reach out independently to one another. Maintaining such a directory provides a fair-value exchange for the firm, which gets up-to-date employment information and business leads.
Fourth, disseminating job postings has been a low-cost item that many attorneys have appreciated in firms that have begun this practice. The firm’s clients are often happy to have applications from alumni, and posting positions of which a firm’s individual attorneys are aware helps build their personal networks as well.
Finally, in headier economic times a number of firms developed a component of their websites specifically dedicated to alumni of the firm, but creating a firm-specific alumni group on Linked In and Facebook can achieve similar results at lower cost. Content is typically driven by determining what information alumni want, which has included career programs (webinars, conference calls, or in-person) and allowing alumni to opt in to different newsletters that practice areas put out with practice/industry-related news.
The future hiring model for large law firms remains up in the air, and the rise in the use of contract attorneys may change these equations so that law firms make money without modifying the way they let their attorneys go. The return on investing in continuing relationships will be great for firms that still want to compete for top talent and loyal clients.
For those firms that want to compete but might have handled layoffs in ways that were less than productive last year, future success will largely depend upon senior management creating a culture that recognizes the value of strong relationships and leverages opportunities to maintain them.
1 “The Year in Law Firm Layoffs – 2009,” LawShucks. According to the blog LawShucks and as cited in the ABA Journal on January 8, 2010, 4,633 lawyers were laid off at 138 large firms.
3 Anonymous posting to Above The Law, February 5, 2009.
4 As posted on Above The Law, December 8, 2009.
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