Why So Many Law Firm Layoffs in Just One Day?
Speculation abounds about why so many lawyers and law firm staffers were axed last Thursday. Was it fear of Friday the 13th? A vast conspiracy? Or mere market forces at work?
In all, 476 staffers and 317 lawyers were laid off—a total of 793 jobs lost.
Above the Law noted the layoffs took place on Thursday, Feb. 12. “You know how a lot of buildings omit the 13th floor out of superstition?” the blog asked. “I bring this up because tomorrow is Friday the 13th, and I’m just wondering if the invisible hand of market collapse decided that Thursday the 12th was a better day for everybody to get fired.”
The Lawyer advanced the conspiracy theory but quickly discounted it. It quotes “one wag” who suggested that a group of managing partners could have struck an agreement to announce the layoffs all in one day, avoiding the public relations hit that strikes an individual firm when it announces layoffs.
The publication goes on to quote a New York partner who says the timing is “more likely just the momentum in the marketplace.” He says it’s early in the first quarter and a natural time for firms to assess their financial balance sheets.
Legal Times also mentions budget timing, and says firms may be discovering that “balance sheets for 2009 are already looking grim.”
Altman Weil legal consultant Ward Bower told the National Law Journal that January was indeed a weak month for many law firms, and that may have produced the mass layoffs. He doubts there was any coordination among the firms.
DLA Piper chairman Francis Burch Jr. echoed Bower’s assessment about January budget numbers. “I suspect that many firms were hoping to see some improvement in January productivity, after a very soft fourth quarter, particularly on the transactional side, but did not,” Burch told the National Law Journal.
Legal Times cites another theory tied to the holidays and President Obama’s stimulus package.
Dan Binstock, managing director of BCG Attorney Search’s Washington, D.C., office, outlined the theory for Legal Times.
“Numerous firms held off on layoffs in December and January because they were avoiding letting people go around the holidays and wanted to see how the economy played out leading up to and after the inauguration,” Binstock told the publication. The economic stimulus package “may have just been that last straw” that convinced law firms the economic downturn would not end soon.
Updated at 8:15 a.m. to include information from the National Law Journal.
