Several large law firms decided to lay off lawyers and professional staff members in response to the decline in demand for various legal services. The serial layoffs that have affected big tech companies are now making their way into Big Law. In recent months, the firms Shearman & Sterling, Goodwin Procter, Stroock & Stroock & Lavan and Davis Wright Tremaine have fired their workers, reports The Wall Street Journal. Companies have said that the cuts are necessary due to rising business costs and a reduction in demand for legal services in a context of a more generalized economic slowdown.
That drop in demand has been especially painful for companies that hired out of rage during the boom years of mergers and acquisitions. When revenues decline, law firms have to reduce costs and, unfortunately, layoffs top the list. Even when their results are good, law firms sometimes follow their competitors by reducing their workforce with “copycat layoffs.” Law firms are also known to carry out “stealth dismissals”, masking reductions in economic base such as performance problems to avoid bad press. Bryan Cave Leighton Paisner has laid off about 50 of its staff in the United States and the United Kingdom, and most of the cuts have occurred in business services.
This is the second round of layoffs in less than a year. Employees and 13 foreign employees in May Lateral hiring fell 35% in all categories of lawyers over the year, according to a new report from the National Association of Legal Employees. Associate hiring plummeted 43 percent, while member moves declined 10 percent, according to NALP. BigLaw layoffs continue to shake the industry, as associate salary increases continue to highlight discrepancies in the sector. In addition, 53 percent of Gen Z respondents indicated that they were interested in eventually moving to an internal, government or non-profit position in the long term, compared to 23 percent who hoped to eventually “become a partner in a large law firm.” The decline in demand has forced several major law firms to lay off lawyers and staff and to reduce your hiring objectives.
After passing the Virginia bar exam, Patrick began to practice private practice and joined a law firm specializing in civil litigation. Many firms are still busy, especially when it comes to countercyclical practices such as bankruptcy and litigation, and are willing to reposition their current talent or to reorganize their junior associates. Bob is told that his name and contact information will remain on the law firm's website for the duration of his firing, and that he won't be working during that time. The legal industry is at a crossroads, and firms need to balance the need for growth with the realities of market.
You want to do your best when meeting people, and you'll make a better first impression when you've had time to process your situation. From Wall Street in New York or the suburbs of New Jersey to San Francisco and many places in between, law firm layoffs are part of the business cycle of law firms and of the economy in general. In other words, you will continue to bear the mental burden of being associated with a firm that has decided to fire you. Economic uncertainty casts a big shadow over the legal sector and often the result is layoffs from law firms.
Stay on top of the law firm dismissal tracker and get a better idea of what's going on in the legal industry. It's more complicated when the dismissal is characterized by performance, but (if the firm's policy allows it) I advise associates to keep asking for recommendations to overcome any possible stigma. Faced with these challenges, companies will need to reevaluate their strategies and consider whether aggressive hiring or equalizing higher compensation scales are sustainable in the long term. Recent law school graduates also face similar challenges, and many are rethinking their career paths in the wake of these layoffs.