One Lawyer Layoff Saves an Average of $250K
Law firms looking to cut budgets get more bang for their buck by laying off lawyers rather than trimming other costs.
About 85 percent of a law firm’s budget goes to pay rent and personnel costs, the National Law Journal reports.
“There’s only so much you can save by pulling the tea and cookies out of the conference room,” one law firm chairman told the National Law Journal. “The rent you’re stuck with, so you’re left with this huge megillah of compensation.”
Law firms that lay off personnel save an average of about $250,000 for each lawyer axed and $100,000 for each support staffer, consultants and law firm leaders told the NLJ.
But some of the savings from layoffs is initially eaten up by severance payments, according to the law firm chairman, who spoke to the NLJ on the condition of anonymity. He said that, generally, the firm pays about $7 million in severance for every $10 million saved in compensation.
Another anonymous law firm chairman told the legal newspaper that it takes about nine months before any savings are realized by lawyer layoffs.
