Nationwide Layoff Watch: Are the K&E 'Layoffs' in the Eye of the Beholder?
There seems to be a lot of hostility towards our coverage of layoff rumors. That's fine -- go ahead, shoot the messenger. But don't say that we didn't warn you. It would be irresponsible to write about "NY to 190" rumors while ignoring similarly reliable (or unreliable) layoff rumors.
Also, rumors -- even when untrue -- can be revealing. The very existence of a rumor reflects the state of the market and sheds light on the psyches of the participants. The fact that pay raise gossip has been supplanted by layoff gossip is telling.
We received many interesting responses to our recent post about layoff rumors at Kirkland & Ellis. Like this one, from someone at K&E (and not one of The Departed, so without an ax to grind):
Surprised it took you so long to pick up the layoff rumors, though I guess K&E has done a reasonably good job of keeping them quiet, even to its own associates.(1) Associate reviews were just completed.
(2) 6-8 mid-level associates [in Chicago] have recently and abruptly left the firm. Rumor is that they were canned. I know two of them personally, and neither of them had ever indicated a desire to leave.
(3) As for causes, I initially heard that extraordinarily low hours were to blame. Other sources suggest that performance was an issue.
(4) At least one of the layoffs really has people baffled: good hard worker who appeared to put in reasonable hours.... [T]he response in the Chicago office appears to be a bit bewildered, especially with respect to the one associate who seemed to be very well-regarded.
More information, compiled from multiple Kirkland sources in different offices, appears after the jump.
As for the department the affected associates were in, we hear that most (if not all) were in litigation. But there are rumors of associates being affected in other departments too (e.g., tax).
Corroboration from another tipster about the Chicago news:
For what it is worth, I heard about two such "layoffs" from an associate at K&E in Chicago about two weeks ago. The details of both associates' stories fit the facts in this paragraph from your post:"Sources say that these associates (1) were told that they had until the end of this year to find new jobs, and (2) were not previously made aware of any problems with their performance. In other words, they weren't warned, maybe six months or a year ago, of problems with the quality of their work or their hours that had to be cured."
We're also hearing this phenomenon has spread in New York:
The "stealth layoffs" are also occurring in the New York office. In our reviews, we were told that the firm was cracking down this year. I have talked to a number of third- to fifth-years in New York and a significant number of them got reviews that were completely unexpected and nothing like what they had received before.We even heard from one of The Departed:There is an associate in our group who is well-liked and has received a number of outstanding reviews in the past. This associate probably billed close to 2800 hours or above. I have worked with this associate in the past and believe him/her to be one of the best in their class. The associate was graded as "with class" (instead of above class). That was shocking to me.
I was completely floored at my review. I had never received anything like it in my life. I was told that it would be a good idea for me to look elsewhere.For about two weeks, I basically walked around like a zombie. Then, word slowly started leaking about what was going on in the reviews (at least in our department). I'm not sure why the firm is doing this. I'm not sure what to think about Kirkland anymore. I guess I'm still shell shocked.
But one K&E source contends that the rumored layoffs are just business as usual -- departures in the normal course of the firm's standard associate review process:
[T]he rumors you are hearing may very well be due to the normal review process here, which just happened in September. As I'm sure you know, we are each given a rating of "with class," "above class," or "below class." Particularly for more senior associates, if you are ranked below class, you are often expected to leave -- and you aren't always notified in advance or given a second chance.This is true regardless of how well the firm is doing financially. Hearing that 10 people in the Chicago office were ranked below class would not be not surprising considering the size of the office. This seems like a far more plausible scenario than random layoffs, especially considering the fact that all I hear about lately is how we need more associates.
Fair enough. It's certainly possible that people who were canned for performance reasons are trying to spin their departures as "layoffs." The rumors may be coming from a group of disgruntled, soon-to-be-former associates, trying to maximize their chances of landing new jobs.
But there's some additional interesting gossip we're hearing. Word on the street is that K&E, in order to deal with the "problem" of escalating associate salaries, is incorporating an hours component into what had heretofore been a pure "merits" rating for determining who is top of class, above class, with class, and below class.
This is a departure from past practice, in which the "merits" rating was viewed as independent of hours. The "merits" rating, when combined with the separate hours component, would then determine an associate's bonus. Under the new regime, hours effectively get "double-counted" in the bonus calculation: they're considered once for "merits" purposes and class rank, and again for bonus purposes. Another K&E source opines:
The upshot is that mediocre associates with big hours are rated higher then stellar associates with lower hours, for purposes of class rank (not just bonus). This may seem perfectly fine, but it does detract from the notion that K&E pushes, that it is a meriotocracy above all else.
What do we think? K&E isn't engaging in quintessential layoffs -- widespread, large-scale, business-driven employee dismissals -- but perhaps they are doing selective "soft layoffs" or "stealth layoffs."
Thus, these "layoffs" may be in the eye of the beholder. To the affected associates, they look like "layoffs" (and have the same consequences). But to the firm, they're just "performance-based dismissals."
Could the standards used at K&E for evaluating associate performance have been adjusted upward lately? Quite possibly. But that doesn't make them "layoffs," at least not in the strict sense of the word (hence our calling them "soft layoffs" or "stealth layoffs").
If you can shed more light on what's going on at K&E, please email us. Thanks.
Update: A rebuttal to the rumors of layoffs, soft or otherwise, appears here.
Earlier: Nationwide Layoff Watch: Kirkland & Ellis (Chicago)
(143) Comments
First!
Firt i mean first
Lat, existence of the rumor does not just reflect the market - it *affects* the market. Thus, when you write things like "National Layoff Watch," implying in the very title that national layoffs are ongoing, and you are here to provide coverage, you are being pretty irresponsible.
"The very existence of a rumor reflects the state of the market and sheds light on the psyches of the participants."
I hear ATL is going under.
fif !
fif !
Maybe it’s a coincidence, but prior to the postings on ATL, there have been rumors on xoxo and greedy associates that Kirkland LA has been shedding a disproportionately high number of mid-level associates
Perhaps the market needs to go under, or at least be subdued. Is a market that perpetually skyrockets upward really a market? More layoffs! NYC to $125K!!!
What's that? Uh -- Layoffs? Don't talk about -- Layoffs? You kidding me? Layoffs? I just hope we can win a game!
I hate to say it, but didn't you think this was going to happen? They're paying the same amount of people more money for doing the same amount of work. Rate increases could only absorb it so much without clients complaining. They would much rather make us work harder than piss off our clients. To keep profits the same they have to get more work out of the same people, or if there is less work, the same work out of less people. It's simple math ...
*snickers*
"Maybe it’s a coincidence, but prior to the postings on ATL, there have been rumors on xoxo and greedy associates that Kirkland LA has been shedding a disproportionately high number of mid-level associates"
NO, NO, NO. I POSTED that question on greedy (which was never reponded to), and it was to ask whether there was any substance to the xoxo rumors.
4:14(2): I don't know if ATL is going under, but rumor is that Lat is interviewing for MSM jobs.
Some of you who bitch about Lat in the comments may miss him once he's gone.
"it was to ask whether there was any substance to the xoxo rumors."
Whatever the rumor is, I can guarantee the answer is "no" when it comes to XO.
Well, apparently it's not a rumor: a non-negligible number of K&E associates have been laid off, including associates who by many objective measures appeared "on track."
You work at a law firm. You get to a certain level of seniority and they tell you to leave for seemingly trumped up reasons. Hours matter.
Wow. Who would have thought???
I don't care what your firm "pushes" or tells you. The constant is that firms limit entry into the upper echelons and that the amount of money you bring in (read: hours billed) does matter. This has been going on at all firms since people wanted to make a profit. Get used to it. Its not layoffs, its normal firm encouraged attrition. And its not news.
Wait, you mean people laid off think they're "on track," but management doesn't?
I also understand that Adam Key has a "brilliant critique" of Joel Osteen, but that the book publishers just won't take on Joel.
I also understand that Elana Elbogen thinks she has a legitimate lawsuit against the florist, but that the commenters on this thread are heartless and cruel.
...or it could be that individuals' self-delusional views of their own "excellent" performance are, uh, worthless.
I heard that ATL is going under too... Sucks...used to be a good site.
I don't know if ATL is going under, but rumor is that Lat is going down.
"non-negligible number"? Kirkland Chicago has 614 attorneys according to NALP. "6-8" comes out to approximately 1%. That's "non-negligible? Even if it's the 326 associates, that's 2%. "non-negligible"?
On the initial K & E lay-offs thread, a few posters indicated that their firms have assured them (at a "town hall"?) that there would not be lay-offs. Any word as to whether firms (K & E or others) will be giving such comfort to their 2008 associates (i.e. those who just accepted post-summer offers)?
I guess the right-wingers at Kirkland are getting a taste of their own ideology :-)
K&E's whole schtick is type-A, refuse to settle, act like an a-hole during negotiations, etc.
Big surprise they treat their own the same way.
"non-negligible number"? Kirkland Chicago has 614 attorneys according to NALP. "6-8" comes out to approximately 1%. That's "non-negligible? Even if it's the 326 associates, that's 2%. "non-negligible"?
What's the severance package like when you get laid off at a BIGLAW firm?
It's objectively non-negligible; a ten lawyer loss means you obviously had a considerable amount of fat to cut. Considering how closely partners watch profits, ten associates out the door at one office is no small number, even at a 600+ lawyer firm.
Of course, if you want to know whether it's non-negligible for K&E, you'd have to look at past years' numbers as well.
Fairly typical to give you 60 days notice- you can sit home looking for a job and still get paid for 2 months.
4:21--
That's awesome! You need to work in Allen Iverson's "practice" tirade at some point.
"considerable amount of fat to cut." What? Do you have any idea how many people leave firms after they get their year-end bonus? A loss of 20 or 30 attorneys barely fazes a 600+ outfit. If they needed more, they lateral in more. If they don't need more, they stop lateraling in. Failing to obtain 10 laterals for 10 outgoing associates could occur in two months, easily.
Well, things can't be that slow around the top shops, given the light traffic on these lay-off threads.
4:48, usually you get a few months notice (and pay) to find other work where you are not generally expected to do much more work (but can't stop completely and do show up at the office occasionally), plus getting paid out for unused vacation when you ultimately leave. No "severance" in the traditional sense.
K&E is, of course, engaging in layoffs. Well known inside the firm for a few months now. Expect more to come. Then YOUR firm will start doing the same.
You people and your comments about Lat going down. You're really giving Lat the shaft here.
5:02 - good points, I agree for the most part. I would only point out that generally, post-bonus attrition is expected and accounted for at most places. There is a steady stream of laterals and incoming associates from the past summer class, so it's not such a 'shock to the system' as it appears in terms of sheer numbers. Asking 10+ lawyers to leave right after their reviews, however -- particularly without any kind of notice or indication that something was awry -- cannot be a good sign and is by most measures an uncommon occurence at most BigLaw shops (unless of course, something is up with the market -- which it is).
This ties into the broader market picture: friends of mine in banking have already reported that big banks (MS, JPMorgan, Credit Suisse) have fired any number of folks because of the slowdown. As you all well know, our industry closely tracks banking (for many reasons), so this surely can't be a positive sign.
http://www.reuters.com/article/businessNews/idUSN1730562420071017
Kirkland does not do this every year. That is why these are stealth layoffs.
THUG Law to 60K- I am hiring Bitches!
Let's all stop being so naive---bigfirms are volume-based businesses. Associates are expensive, once you factor in overhead, etc. Mediocre associates don't cost the firm money, ones who don't bill above their break even point do. They tell us they want good work and want us to do our best, but the system incentivizes mediocrity. K&E and other similarly situation firms just seem to have to have wisened to their business model---when times are slow and the volume is down, you have to cut your overhead/fixed costs.
The model is such that big firms don't care if they are bleeding talent so much as big billers, those people they need to keep around.
In my experience, associates who know the system the best are often not the brightest, they are willing to embellish and fudge to keep their hours up and happy to be mediocre. Its not a judgment, its an observation---biglaw = big business and that's just the way it works at a lot of firms. In slow times like these, they can't openly tell us to be creative with our billing, but the implication is always there.
"Asking 10+ lawyers to leave right after their reviews, however -- particularly without any kind of notice or indication that something was awry"
First, when did 6-8 become 10+? Second, who says "without any kind of notice"? They were given two months' notice. And what, "Sorry, your performance sucks, but hey, let's give it another year and we'll see how you're doing then." Is that what's expected? In plenty of instances, performance is measured at annual reviews. If it's a bad annual review, then you're gone. I don't understand why people think they should have a one-year grace period to fix things.
Dear Mr. Thug:
Please see the attached resume...
Dear Mr. Thug:
Please see the attached resume...
I am sorry, I see you are at loyola. I'll call you if my secretary dies. Thank you and good luck.
5:15 - there were 10+ across all K&E offices. If you're going to use the firmwide no. of attorneys (600+), might as well use the firmwide number of layoffs (def. more than 10). Don't know why your posture is so strongly against my point: that what happened is not "just another day in BigLaw" and is indicative of more pain to come. Look around you - it's just a fact.
5:15:
"If it's a bad annual review, then you're gone. I don't understand why people think they should have a one-year grace period to fix things."
Most law firms don't operate this way. If they did, they would have trouble recruiting.
People don't bust their a$$ to get into a great college, then a great lawschool, then a great clerkship, to have some partner say their interrogatories weren't up to snuff as fourth years, as they show them the door. Sorry.
5:15, do you work at a law firm? Unless you're talking about senior associates who are either going to make partner in the next couple of years or not, it is pretty much unheard of to fire an associate based on a single annual review. And even with such senior associates, it's extremely rare to let them go based on a single review if every review they've had in the past (and all signals they've received from partners they work for in the interim) have been relatively positive. Typically at that point, the person is told to "take another lap" -- i.e., "given a one-year grace period to fix things."
This is the low-risk world of biglaw--it's not like an I-Bank where performance cuts are part of the annual program.
5:15 is a partner or an idiot.
5:26 and 5:27 are right. I've never heard of a soft layoff with less than six months "notice." More often the person can muddle through for longer although salary may begin to decrease.
5:27, with all due respect, you are absolutely wrong about it being "pretty much unheard of to fire an associate based on a single annual review." At my former biglaw shop during my tenure (three years), it happened to a handful of people I knew very well. One year, great review, things progressing fine, next year, "we think you should start to look elsewhere" and given a few months.
5:25 - If you are going to use the firmwide number of attorneys, you should use 1,200+, not 600.
Even if you limit it to associates, 10 out of 800+ is still only slightly over 1%.
And I'm not sure what you are using to support your assertion that it "is indicative of more pain to come. Look around you - it's just a fact."
I would bet it is more common than you think for a firm K&E's size to show a few associates the door each year if they aren't performing up to a firm's standards. K&E is probably just a bit more demaning than most.
At my firm having a large penis can offset negative reviews.
Fair enough 5:34. It is absolutely unheard of at my biglaw shop (where I've been for over three years).
Um, 5:25, "600+" is certainly not an accurate firm-wide number for K&E. The firm has nearly that many lawyers in its Chicago office alone.
5:34: Same here. I know of somebody that happened to at a semi-annual review.
Does this affect patent lawyers?
5:07, Dealbreaker (ATL's sister site) does a pretty good job of tracking banking layoffs, and they have been nowhere near bad enough to expect law firm layoffs yet. The total number doesn't come close to the last slowdown, and it's mostly limited to MBS types, with a few Lev Fin folks sprinkled in here and there.
Besides, the K&E associates we're talking about don't seem to come from the right practice groups for these to be market-driven layoffs.
Kirkland Ellis is one of the nation's preeminent most profitable law firms. So it appears they have a sound strategic business sense and are watching the bottom line. What is wrong with that? Don't a lot of us aspire to work for a preeminent highly profitable firm? A law firm feels economic cycles. I'd much prefer to work for a firm that aggressively manages staffing levels as opposed to letting underproductive people and largesse to sabotage.
Bravo for K&E.
I work at K&E and what is being described aren't layoffs at all !!! Rather young lawyers who are on the lesser side of the curve are gently being shown the door. It happens within every high grade significant law firm. Why exactly is this news?!?
6:21, no, actually. I could give a shit how profitable my firm is as long as I'm getting the same money as everyone else. In fact, given that associate pay is the same everywhere, the best place to be is the place with the *lowest* PPP, since PPP is simply a measure of how much extra work associates are doing (for the same salary) to stuff partners' profits. "The pharaoh that I serf for is richer and more powerful than the pharaoh you serf for, so I get to push 3000 ton rocks while you only get to push 2000 ton rocks." Enjoy it!
I'm with 6:26. If associate salaries were actually based in some way on firm profits, I would have gone to a "top" firm (measured by profits) -- I had the option of doing so (top 1/4 HLS). But they aren't. So--unless there's a specific firm that's a feeder for some DOJ job or something that you really want--I don't understand for a second why anyone wants to be at a "V5" firm (other than maybe Wachtell, which actually does pay more). You can't actually be making this decision based on an assumption that you're going to make partner there (9 years down the road)--that would be completely irrational. And please don't say it's because the work is more interesting--bigger profits come from bigger cases, which mean more boring "leave no stone unturned" bullshit legal research for associates and less client willingness to let associates handle (relatively simple) tasks like depositions. But you do get to tell people that you work at a "V5"!
Lat, seriously bro, is "Regentgate" really the best you could come up with for the Adam Key story? You're painful lack of naming creativity is really beginning to hurt the site. First it was all the awful SA names that you pulled out of your crapper. At least those had some kind of creativity though. Now you've just stooped to the same ol' lame recipe the traditional news media uses for a scandal: just add "gate" to the end of something. LAME!!!
If you really wanted to stick with the "gate" idea, the least you could have done was try something creative, like "Regent Renegate" or something. You can use that if you'd like, but I think we'd all really rather see you start putting some effort into your naming.
Don't tase me, Lat!
Please, Lat, don't tase me, bro!
Please, please, please, don't tase me, Lat!
I love you Lat, I love you! Please, don't tase me!
Lat, I'm carrying your child, bro, don't tase me, please, for our child's sake.
I look forward to getting my $85K bonus now that we're getting rid of some dead weight.
"I work at K&E and what is being described aren't layoffs at all !!! Rather young lawyers who are on the lesser side of the curve are gently being shown the door. It happens within every high grade significant law firm. Why exactly is this news?!?
Posted by: Mel Torme | October 17, 2007 06:23 PM"
This does not happen at every law firm.
I look forward to tasering your a** and stealing your $85K bonus when you walk out of your office.
I know for a fact that some of the people (or so-called "deadweight") shown the door billed over 2500 hours last year. Not so sure how K&E (or anyone who works there) thinks it is improving the bottomline by kicking those associates out. It is a lot of hubris to think you can essentially fire senior associates who obviously make the firm money out and somehow rationalize the decision as sound in any business sense. Perhaps if they were billing under 2000 hours, but to bill that much and have partners we are willing to give such people that much work and to still get thrown out is definitely not something that happens every year, despite what some people on this board might think.
I know for a fact that some of the people (or so-called "deadweight") shown the door billed over 2500 hours last year. Not so sure how K&E (or anyone who works there) thinks it is improving the bottomline by kicking those associates out. It is a lot of hubris to think you can essentially fire senior associates who obviously make the firm money out and somehow rationalize the decision as sound in any business sense. Perhaps if they were billing under 2000 hours, but to bill that much and have partners who are willing to give such people that much work and to still get thrown out is definitely not something that happens every year, despite what some people on this board might think.
Sorry about the typo in the previous post!
Just because people billed over 2.5k doesnt mean that a firm will keep them around. That's pretty silly. A lot of times, these high billers are just inefficient -- and their greater hours simply reflect their lesser skill.
K&E fired these people because they were not good enough to keep on board. If they were good enough to keep on board, K&E would have no incentive to fire them.
I suspect that the high billers probably had a lot of their hours "written off" because someone of their seniority should have taken less time.
Just because people billed over 2.5k doesnt mean that a firm will keep them around. That's pretty silly. A lot of times, these high billers are just inefficient -- and their greater hours simply reflect their lesser skill.
K&E fired these people because they were not good enough to keep on board. If they were good enough to keep on board, K&E would have no incentive to fire them.
I suspect that the high billers probably had a lot of their hours "written off" because someone of their seniority should have taken less time.
K&E writes off very few hours. Maybe those high billers are inefficient but most K&E clients pay whatever bills are put in front of them. What Albert says might be true of other firms, but not at K&E (at least from an associate billable hour profitability standpoint).
Well, I know the soft lay-offs have been going on for a while in DC...as the last mid-level associate left in my entering class, I have watched several of the others be given the "you have six months to find a new job".... And some of the reasons for getting rid of them were prettttty sketchy not just billable hours...
Boys and girls, what part don't you get about working for a prominent Am Law 100 firm?!? Either you produce at a consistently high level and demonstrate that you are partner material, or you are out the door at Kirkland & Ellis. And yes, if there is slowdown in certain practice areas then your ongoing employment relationship is going to be in jeopardy. This is the real world boys and girls. If you find the rules of engagement objectionable, then transition to public service. Or transition out of the legal professional altogether. Big law firms aren't in the business of being altruistic. They are in the business to serve their clients in top flight manner, be good citizens and generate profitable return for their partner owners while providing a challenging and rewarding work existence for all members.
1st years in this firm are paid $160 th. And you can be damned straight that even at this nebule stage they know the rules of engagement. Maybe some of your firms are disingenious?? Or maybe some of you refuse to accept reality and the principles of free enterprise as it applies to a professional services firm??
The reasons some people were given were definitely sketchy. The firm was obviously grasping at straws and trying to find any nitpick to justify the soft lay-offs instead of just being straight up with people. If someone billed a lot of hours they were told that they were not good attorneys and if someone did not bill a lot of hours they were told they were a great attorneys but not pulling their weight.
This is an anonymous comment on a legal "tabloid," and what I'm about to say is hearsay, so take it for what it's worth, BUT--
A friend of mine, who is married to a partner on the management committee at a Vault 50 law firm, said to me that the consequence of the most recent round of pay raises would inevitably be that firms would begin the "pruning" process earlier and that "lesser" associates would start being aggressively forced out as early as their third year.
I think that 4:23 and 4:39 have it exactly right. It's just happening earlier than previously because of higher associate salaries across the board.
Mr Anonymous Partner is right. Why are people shocked that a profit-maximizing firm has found cause to fire some of its employees?
Even if K&E only let these people go because of factors -- such as the state of the market -- external to the competence of the employees, what's the big deal? Isn't this what every profit-seeking entity does?
Whence the assumption that law firms are exempt from the pull and tug, and greed, of capitalism? It is true that law firms are professional associations, and as such different in certain respects from other business: we are not at arms-length with our clients, for instance. But at the end of the day, these differences don't make it any less unremarkable that some associates got fired from a law firm.
Wrong, it's typically been next to impossible to get fired from a law firm unless (a) you are an 8th year associate about whom the determination has been made that you will not make partner or (b) you seriously fucked something up on the level of malpractice.
Firing 3rd year associates based on annual performance reviews is not at all normal. That's why this is a risk-averse line of work (unlike, say, our far better compensated banker counterparts whose "rules of engagement" clearly put banking associates on notice that they may be let go at any year -- though frankly I don't have a single banker friend who's been let go either).
I wonder if any of the associates were fired for undue groppage . . .
Albert Groper aka Anonymous Partner:
Prune all you want. It just means that you will not get top talent, who'd rather not be pruned. There is a cost to everything.
"Mr Anonymous Partner is right. Why are people shocked that a profit-maximizing firm has found cause to fire some of its employees?"
Because if firms do this, they will have trouble recruiting top legal talent, which has an even greater cost.
http://www.law.com/jsp/ihc/PubArticleIHC.jsp?id=1192525412081
Litigation's in a slow down, tis the deep dark secret of the legal industry. Pray for a Dem President and a new round of corporate scandals.
What I don't get is why these firms aren't firing unprofitable partners BEFORE letting go of unprofitable associates? Those partners sinking the per partner profit ratio are the ones who should be "pruned"...
What I don't get is why these firms aren't firing unprofitable partners BEFORE letting go of unprofitable associates? Those partners sinking the per partner profit ratio are the ones who should be "pruned"...
7:47 is right - albeit a bit harsh in tone.
8:15 - what reality are you in?
I've been in AmLaw 100 firms for 20 years - in 2 of the top 5 legal markets in the US. For the past 10 years (with a brief hiatus when I lateralled), as a partner, I've been on the committee (at 2 firms) that does associate reviews.
Memo to BigLaw associates: THE BAR IS HIGH, AND GOING HIGHER JUST AS QUICKLY AS YOUR SALARIES DO.
"At Class" or "Acceptable" or "B" work means that you have a job only for as long as you make economic sense. We may look long term (impact on our market reputation, potential as a partner or rain maker, etc.) or we may look short term (how many hours will you bill next year) -- it's our call (aka EMPLOYMENT AT WILL).
When we tell you that you have a serious issue, even if we put some nice adjectives (dedicated, hard-working, etc.) in the review that you read, we' re laying the ground to fire you next year.
And, if your work is so-so and your hours are below 1900: pack now. Don't wait for us. Come to your best friend in the firm and say "I've always wanted to be an in-house counsel; since I love this firm so much, can the firm help find me a job?" Maybe...just maybe...it will buy you 6 months while that partner dreams of the billings you'll send her/him.
Get real. Partners sell billable hours. We purchase them in bulk, and sell them to clients at a huge markup. But if they don't sell, they spoil really quickly.
To 8:50/8:51: What? Are you kidding? Partners are being cut just as aggressively as associates. And, with partners, their pay gets whacked before they do.
Partners get "de-equitized" (see Mayer Brown). Partners lose points, resulting in a swing of more than an BigLaw 8th year could hope to get. Every AmLaw 100 firm has a few partners working for bases equal to 1st year associate $$ plus "incentives".
Partners are "pruned" all the time. We just don't run around saying so when it happens...because we all think "there but for the grace of God go I"
is this bad news for current 3L's?
That's your experience, "Partner," and if you truly are a 20-year partner (I'm shocked that you'd be posting here), you certainly have more of it (experience) than I. But in my 4 years at my AmLaw 50 firm, I have *never* heard of anyone more junior than year 7 be let go as the result of an annual review. I guess I should be happy that I've never had a review that wasn't positive, but I know others who have been less fortunate--and none of them were told to pack up. My HLS classmates at other AmLaw 100 firms have all had the exact same experience. I've just never heard of anyone who wasn't "being turned down for partner" getting "fired."
I for one very much appreciate any and all information (the good and bad) about the legal market. ATL has done so much to increase market transparency for associates and has helped me to make more informed choices.
The "X firm will not attract top talent because of firings" argument is overdone. Several firms that dumped associates a few years ago have been doing just fine with recruiting. Are they getting all Order of the Coif students? No, but they never did to begin with. (And you 2Ls/3Ls don't even know which firms dumped associates earlier this decade, with a couple exceptions, so your mantra is pretty hollow).
Also, do firms really care about stocking their classes only with "top talent?" Sure they'd like to, but it doesn't really take top talent to do most of what you'll be doing in you first several years as an associate. Chances are you'll be gone in a few years anyway. And middle-of-the-class grads make just as good cogs as supposed top talent.
Finally, law school gunners believe they are the best of the best and don't think they'd ever get laid off. "Top talent" would never get laid off, would they? In their minds, no.
Another Anonymous Partner may as well have and called himself "Another Anonymous AmLaw 51-100 Partner"
There is no question these rumors are being spread by AmLaw 51-100 partners hoping to stall the pay raises that are increasingly squeezing their already low PPP.
There is no question what is going to happen next. The AmLaw top 20 or so will raise salaries again, and most of the rest will be unable to follow.
Then, the next time competition for talent heats up, the strong talent will go where the strong talent is supposed to go... to the top firms.
It makes no sense for associates at the top 10 firms to be paid the same as associates from the bottom 10 of the AmLaw 100. The firms making $2 million+ PPP have a strong opportunity to cut themselves from the herd.
Time to do it, and reclaim the lost talent that has been falling down the list.
The point, to the Anonymous Partners posting here, is not that K&E associates don't understand how the top flight legal market works. You're not saying anything particularly bright or novel. To the extent you really are basing the "merits" ranking on hours (if that's not an oxymoron, its a non-sequitor), you leave yourself open to the possibility that before long your firm will be populated by only the worker-drones, while the otherwise top ranked, but lower billing associates, leave for greener pastures. What that means is you will be left with a firm filled with high-billing associates (and later, non-share partners), who can review your documents, supervise your contract attorneys, and otherwise bill to the hilt while petering on discovery issues, while the rare few associates who provide you with your litigation strategy, write your briefs, and, in the end, win your cases, will leave for firms that appreciate real talent. These are the associates who will become partners elsewhere and beat your ass down the line, which will not be good for you. Thus, this is not really about us being greedy, its about you being stupid and shortsighted. Please - help us help you!
Layoffs for associates more senior than the fourth year simply do not make business sense.
Senior associates certainly had face time before the client and can simply take the client at half the hourly rate.
The last paycheck would be enough in any major market to lease decent space on a short term basis, get computers, subscribe to reporter database, and obtain a secretary from a temp agency. Presto, you are in business enough to cut your rate to $250/hr and do the same work for the client.
If business is bad that associates have to be laid off, then senior associates leaving to start their firm and take work at cut rates from the big players should be the firm's greatest worry - not how they can have a stealth layoff.
Most profitable legal work is a commodity to in-house counsels. As long as they feel they can trust the attorney, they would be happy to cut costs.
A senior associate would be even more likely to have work move with him/her if they associated with a smaller firm.
Dude - what is up with the "making at least 1900 hours" or you are vulnerable... I think we have lost touch with where the law was before in the 80s, where 1650 was considered full time. It is INSANE to be working 2500+ hours, as folks here claim... and sounds kinda impossible if you ask me.
Senior associates who can do the work are a lot less rare than senior associates with the chutzpah and credibility to talk an AmLaw 100 client away from a big firm—even at half the hourly rate.
Trust me, the equity partners are not exactly laying awake at night fretting about that fantasy.
In addition, here is how the layoff will come down.
Your building pass won’t work one day or you will be escorted out of the office sans files that same day. No advance warning to woo the clients, who will all be talked to before even know you are gone.
Right, 10:05. 1950 or so is the average. Not just at lifestyle firms, but at Sullivan, Simpson, Skadden, etc.
Some work 2500+. They are in the minority.
Some also work 1700-1800. They keep their jobs.
Some 6th years have never done 2000 before. They keep their jobs.
People love to talk about how many hours are worked. In reality, it's pretty reasonable 90% of the time.
I don't buy the idea that firing associates is a cost cutting measure.
First, a 3rd-5th year represents considerable sunk costs. That's a big part of a reason that firms are so reluctant to fire mid-level associates.
Second, the actual cost of a 3rd-5th associate is quite low. Let's say K&E fires 10 people. What are they saving? 2.5-3 million/year? Even if it was 4 million, that's peanuts when spread among a couple hundred partners.
Third, it is really, really hard not to be a profitable associate.
If I was a partner and I fired associates, my bigger worry would be associate morale not recruiting -- especially at K&E. When you have people killing themselves for you, it would seem that the last thing you would want to do is make them think they could be next.
Also, don't kid yourselves, people. I woudl bet about half of the people who say they are billing over 2500 are padding, big time.
The other half are big time gunners, and voluntarily take on the extra 500 hours or so to get to 2500.
The other 80% of biglaw associates work hard, but not crazy hours. They work about 40-50 hours a week, and bill about 1900 hours a year.
That is average, and the average associates does NOT get laid off.
10.14
You forget the support staff that goes away and all the benies. I would say that a multiplier of 1.5 to the salaries to account for benies is typical.
10 associates @ 4 mill * 1.5 = 6 mill
support staff @2 million
say 8 million
Pretty sizeable and this is the tip of the iceberg
10:21 - I don't understand your math. For 10 associates, average of say, 4th year:
Base + bonus about $250k = $2.5 million
I don't understand where benefits get you a 1.5 multiplier. Benefits don't cost $125,000 for a 5th year associate. What benefits are they getting??? More like about $10k per associate, so we're at $2.6 million.
No mention of support staff layoffs. 9-5 is a sunk cost, but overtime, etc. is taken care of by the client.
So we're left with just $2.6 million per associate. Assuming they bill 0 hours.
Of course, if each associate bills 1000 hours at $400 per hour... that's $4 million.
Which is a profit of $1.4 million.
10.10
You are right. The ones with the cojones are rare, but you would be amazed what people can do if pushed. The aggressive associates already have the client names, email addresses, and file summaries safely stashed outside the office.
Anyway, what's the Blackberry for if not to have email addresses and accustom the client to talking to you.
Ohhhh, you want my Blackberry. Ummm, I think I lost it somewhere.
An associate may cost 250k in base plus bonus. The health care, social security tax, employer tax etc adds up to another 50% roughly.
250*1.5 = 375
375*10 = 3.75 in associate salary savings
say support staff is 50% of that, 1.875 mil, say 2 mill
$5.75 million in savings
thought exercise:
1800 hours x $300/hr (conservatively) = $540k
$540k - $200k (salary) - $140k (support staff/other costs) = $200k
rough estimate: $200k firm profit for an associate who bills 1800.
tell me again, "partners," why it makes economic sense to fire an associate who is billing and hasn't committed malpractice?
Nice one, 4:40(1).
I heard that Cahill has had "the talk" with a few associates too. Not surprising considering that the vast majority of their profits comes from high yield debt and leverage loans for leveraged buyouts and other acquisition financing. Damn - their PPP must be taking a crushing since they have no litigation work to speak of
Serf's up,
"The firm" is not a volume seller. Just because an associate is producing, does not mean he is worth keeping around - so long as he can be replaced by someone who produces even more.
Associates can do more than just staff the matters they are on and close deals/write motions, whatever. Good associates will spot shit that generates *more* hours - a potential clever argument by the other side - something that will require the client to cover his ass even more.
If you can fire a 2000 hour billing drone, and bring in a 2000 hour billing thinker, who gets work for others, you are going to do that.
one-hundred and FIRST bitches!
To the Partner @ 8:57: Your comments prove too much. Most of all, your tone says more than anything. Your comments, measured against those of other people posting here, demonstrate one, and only one thing: that you are an asshole, that you work at a firm of assholes, and that your firm (be honest, do you work at K&E?) is not the same as other firms, that some firms are far more decent and humane and less cynical than other firms. That is the whole purpose of this blog: to expose the lie that all firms are the same. While trying to lecture us, you only confirm the purpose of this site and validate its wisdom: it's because of assholes like you that we all need to be cautious about where to work. Given your attitude, I'd expect you'd be happy to tell us where you work so that us decent folk can stay away from your firm, and so your firm can attract only those associates who buy into your approach. So, where are you a partner?
I still don't understand how benefits are another 50% of salary.
Even assuming a very good health care plan for a family of four fully paid by the employer (doubtful), you are not looking at more than 10k a year. And that represents the lion's share (80% at least) of a benefits package. So maybe, MAYBE, benefits cost 15k for an associate with a family of four. Of course, some associates are single, but let's just say 15k
Payroll taxes are easy. Social security = 6.2% of 97,500 = $6045. Medicate = 1.45% of 250k = $3625. So 10k for payroll taxes.
That's $25k for benefits and payroll taxes on top of $250k. I highly doubt state unemployment taxes cost another $100k, so your math there is way off. Let's say it's $290k, total, assuming all benefits for a very costly associate.
Second, you're assuming that for every $250k associate, $125k in support staff is being laid off. That's about 3 support staff for each associate. Hardly. Associates share secretaries with 3-4 other attorneys. Everyone else bills to clients. More like $15k in support staff saved.
That puts us at $305k. Sure, there's overhead, but that's mostly a fixed cost anyway. Firms don't save much in rent by cutting an associate or two. It's not like Kirkland is switching to a smaller building. The lights are still on. The coffee is still being stocked. The A/C or heat are still pumping.
Sorry, 7th Year, I do get what you're saying, but I think you're overestimating the cost of an associate. Outside of salary, it just isn't that much.
10:38 - only stub years bill $300 anymore. It's about $360 once you pass the bar. $400 in your second year. By the time you're 4th-5th year, it's closer to $500 per hour.
11:21 - correct on all counts, but add in malpractice insurance for 6k or so a head, and in some states the bullshit lawyer tax
My firm is hiring like crazy, both laterally and for the summer class. We have even taken to importing foreign lawyers from commonwealth countries (mostly australia). Surely my firm (top 10 or 15 in NY) isn't an exception. And anyway, hirings would decrease prior to layoffs. Right? I get more calls from recruiters than ever before, the phone has been ringing off the hook for months.
Yet, you guys are talking about layoffs? I really don't understand. Ten people, by definition, cannot be termed layoffs (unless it is a 20 person shop).
Everyone I know is crazy busy, and there is plenty of work to go around