Legal News

Making Sense of ?Black Thursday? . . . And a Look Forward

By Ashby Jones

And what — perish the thought — will Friday the 13th bring?

It’s gotta be ugly, very ugly, to top Thursday the 12th. Above the Law has pegged the total tally of Big Law lawyers and staff members laid off in the last two days at 828. Click here for coverage from the National Law Journal; here for the Recorder’s take.

For now, in attempt to make sense of it all, a few rhetorical questions from LBHQ:

Is this the end of it? Unfortunately, probably not. Consider this ominous quote, found in the Recorder this morning: “There will be more,” said law-firm consultant Peter Zeughauser. “Materially more. I’m aware of some big ones coming up.”

Why yesterday? First things first. The period between January and April is typically a fallow one for law firms. The year-end collection season has come and gone and firms have to ready themselves for a big tax bill come April 15. So it’s a reasonable time to cut overhead.

But the jury still seems to be out on why there was so much cutting done yesterday. One hypothesis, from Jerry Kowalski, a legal consultant: Jump in when everyone else is doing it. “In past years, law firms lost a lot of their reputation when they announced layoffs. Now, because all of the expectations for 2009 are so bad, it’s no big deal,” he said. “You want to get buried in the tsunami of layoffs.”

Anything else to read on the topic? Fortunately, yes. A piece out today by Aric Press, the editor-in-chief at American Lawyer, does a top-notch job of summarizing where we are and how we got here. One modest proposal to firms from Press: dial back the starting salaries:

Those days are over and yet the 160K bogie remains as inviolate as though it were handed down at Sinai. If the market–and not weird lemming-style management–drove the salaries up, then presumably the market should drive them down. How far? Back to $130,000, where they lodged at the peak of the tech boom? Back to $100,000, which one managing partner refers to as a “life-boat offer”–if you take it, we guarantee not to throw you over the side for several years? . . . Not every firm will choose to cut starting salaries. Some can afford them, for others it will be a matter of pride. And a clever few will break with the past and pay some of their new recruits more than others. But we’ve never done that! Correct, and you’ve never laid off 80 lawyers in a day either.

Full post as published by Law Blog - WSJ.com on February 13, 2009 (boomark / email).