Opening Statements

By The Numbers

Posted Jul 1, 2009 10:20 PM CDT
By Stephanie Francis Ward

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As the economic downturn continues to plague law firms, many are resorting to attorney layoffs as a way to cut costs. But the Project for Attorney Retention, part of the University of California’s Hastings College of the Law in San Francisco, says not so fast.

If firms really want to save costs—tangible and intangible—they ought to consider reducing hours and compensation of nonpartner attorneys across the board in impacted practice groups, according to the project.

Firms can save more by reducing the hours—and compensation—of a significant number of their attorneys than by outright firing a small number of lawyers, the group maintains.

Here’s the math based on a six-person practice group with each associate earning an average $200,000 salary:

COST SAVINGS OF REDUCING HOURS AND COMPENSATION BY 20% FOR SIX ASSOCIATES IN A PRACTICE GROUP:

$240,000

($40,000 per attorney)


SAVINGS FROM LAYING OFF ONE ATTORNEY:


Salary:

$200,000


Benefits:

+$60,000


Malpractice insurance:

+$4,000


Three months’ severance:

-$50,000


Outplacement services:

-$3,000

=

$211,000

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