Layoffs
Partner Ousters Double or Triple the Pace of Two Years Ago, Consultant Says
Posted Mar 12, 2009 6:33 AM CST
By Debra Cassens Weiss
Few U.S. law firms are acknowledging partner cuts, but they are happening and could gather steam if firm leaders foresee a long recession.
Consultants tell the Daily Journal (sub. req.) that partner terminations are on the upswing and, if the downturn continues, they will likely be made in a proportion that is at least half that of associate layoffs.
One law firm that has recently acknowledged partner ousters is White & Case, which has pledged to restructure its partnership, resulting in “a reduction in the number of partners.” Two other law firms—Holland & Knight and McDermott, Will & Emery—have also acknowledged laying off some partners, but did not provide specifics.
Legal consultant Blane Prescott of Hildebrandt International told the Daily Journal that partner terminations have “definitely increased.”
"I'd say the pace is easily twice the pace of two years ago. Maybe three times," Prescott said.
Tony Williams of London-based Jomati Consultants told the publication that firms are likely considering partner cuts to preserve associate-to-partner ratios. A firm that has laid off 10 percent of its associates will consider cutting at least 5 percent of its partners—and probably more, he said.
Williams said firm leaders won’t cut partners unless they believe the downturn will persist into late 2010, since severance costs can equal a year’s salary for equity partners.
Several U.K. firms have also announced partner layoffs, the Daily Journal says. They include Allen & Overy, Linklaters, Ashurst and Addleshaw Goddard. U.S. firms making partner cuts in 2008 and prior years include Jenner & Block, Mayer Brown, Winston & Strawn, and Sonnenschein Nath & Rosenthal.
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Comments
B. McLeod
Mar 12, 2009 8:07 AM CST
As revenues decline, the issue will come down to “How much deadwood can you float”? At some point, when every possible “staff lawyer” and “associate” has already been thrown over the side, less productive partners will have to walk the plank. I’m going to make sure I have plenty of popcorn on hand for the show when the partners start to turn on each other like rats.
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csc
Mar 12, 2009 9:46 AM CST
How is it you have time to comment on every story?
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B. McLeod
Mar 12, 2009 10:35 AM CST
How is it, Grasshopper, that you do not?
Also, experienced denizens of this site will have noticed, I do not comment on every story.
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Debra Veoli
Mar 13, 2009 4:23 AM CST
I think partner is not what it used to be. When I started out, I wanted to make partner. I did not, but I got married. I have my own partner, although he is losing his hair.
In times like this, you have to hold on to what you have, even if it’s not everything it could / should be.
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gea_36000@hotmail.com
Mar 13, 2009 5:03 AM CST
How is it that some partners have more rights than others or is it really based on market based who was more profitable the last five years or is it who has more power?
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pot calling kettle
Mar 13, 2009 7:46 AM CST
Re: # 2 - one wonders how you have time to notice that someone else has time to comment on every story.
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109
Mar 13, 2009 8:54 AM CST
Is it possible to lay off an equity partner? Would the layoffs only affect income partners? I would have thought equity partners could not be laid off… unless maybe the other equity partners voted them out?
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KatBird
Mar 13, 2009 9:05 AM CST
This would make an interesting ‘OP” story to rats turning on each other: law partners engage in constructive conflict management to find beneficial collaborative outcome. Other industries do it, why not us?
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The Commentator
Mar 13, 2009 9:51 AM CST
#2 is right. B. Mcleod seems to have nothing else to do but to make sure he/she is the first to comment on every story. If you feel so passionate about writing, why don’t you join the ABA report team?
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B. McLeod
Mar 13, 2009 10:53 AM CST
#9, I think #6’s comment pertains to you as well.
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Dispossessed
Mar 13, 2009 12:52 PM CST
#7—Under many partnership agreements, the firm’s management committee has the power to dismiss a partner, including an equity partner, without cause
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gmz
Mar 14, 2009 1:34 AM CST
With the social compact now completely broken within law firms, I wonder if the model can hold together at all.
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DCEsq.
Mar 14, 2009 10:49 AM CST
This development is neither surprising nor one that elicits my sympathy. If law is undertaken as a “business” the law firms (and all who form part of them) must be prepared to take the consequences of running a business. I am thankful that lawyers have not managed to plead for government funding, unlike that other “profession” that is run like a business but that refuses to accept business consequences: bankers.
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StayMotivated
Mar 16, 2009 10:43 AM CST
Law firms began to die when they expected loyalty to flow UP the chain of command but refused to make it flow down as well. Unfortunately, it appears that law firms are more accepting of the fact that they can get away with not letting loyalty flow laterally either.
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