Last week I suggested that the potent stigma preventing layoffs at top-shelf firms was melting away. Thinking about the Latham & Watkins layoffs, I wrote:
Latham is so large and reputable, and these layoffs so public, that a good number of big, fancy firms will now find they have cover – that they won't suffer significant comparative reputatiton damage – if they lay off. This doesn't mean that Cravath or Wilmer will lay off associates…but don't be stunned if a Paul, Weiss or Skadden, Arps does.
A commentor responded:
If you think there's a fundamental difference between Cravath and Wilmer on the one hand and Skadden and Paul Weiss on the other, you're wrong. If anything, the latter two are in a better position. Cravath's business model is concentrated on the big banks of New York and London. They took a 24% PPP hit last year and have a new very pricey lease kicking in in 2009.
But the commentor and I agreed on one thing: once Cravath does a public layoff, the stigma around layoffs is fully gone.
Well it hasn't happened yet, but Cravath is cutting back another way: ATL reports that it has shortened its summer from 12 to 10 weeks. The decision may make economic sense – they're saving something like $7000 per summer associate, I'm guessing, and this move may save them several hundred grand – but it also places them in the company of regular old "big firms". To be sure, they're not alone. Kirkland, Gibson Dunn and Shearman & Sterling appear to be doing the same. So we can reach the following conclusions:
1. All stigma around shortening summers is gone.
2. Any time now, all stigma around layoffs may be gone.
Here's the real question. Is Cravath, the firm that pioneered radical raises with its $12,000 hike back in the 1980's, ready to pioneer pay cuts? I suspect that a lot of grateful law firms would quickly follow.
this is a terrrrible article!
I don't think the stigma is gone, layoffs are layoffs. This would just confirm the fact that all firms are equally unskilled at predicting their employment needs.
why are skadden and paul weiss in a better position than wilmer?
do you read what you write before you post it?
what are you talking about?! why is wilmer in the same class as cravath and not skadden, pw, or latham? and if you look objectively at what cravath faces in the future (the incredible sizes of their incoming class for less than 100 partners), then you'll see layoffs are inevitable.
but who knows, maybe they'll just do some massive stealth layoffs and screw associates out of severance like they do with cold offers to keep their "prestige"
The concern is always client perception. If the bulk of your clients are having massive layoffs and some are even disappearing, why does anyone think that there will be a stigma if the clients' law firm reduces head count? It's to be expected. If I were a client, I would be concerned about a Firm that hasn't made adjustments, because it is probably overstaffing my matters.
I hope you all have a blessed day