Are Law Firm Layoffs Coming Soon?
As the economy declines, will we see a repeat of the associate layoffs that we saw in the late 1980s following Black Monday, the early 1990s following the savings-and-loan scandals and again in the 2002 with the burst of the dot-com bubble? That's the question that Gina Passarella explores in this article, With Dip in Economy, Are Associate Layoffs on the Horizon? (The Legal Intelligencer, 8/28/07). According to the article, some law firm leaders are predicting layoffs in areas like structured finance, real estate and corporate mergers and acquisitions. Others speculate that any downturn will be offset by the growth of practice areas like bankruptcy and litigation.
And how will the changing market impact associates? Duane Morris Chairman Sheldon Bonovitz is quoted in the article as saying that layoffs are a possibility in some fields. But others are more optimistic, pointing out that corporate attorneys are in high demand, and it is unlikely that any will be laid off should the economy take a turn for the worse.
At the WSJ Law Blog, commenters share their predictions here. Some predict that small and midsize firms, which are less diverse than large firms, will take a bigger hit. And others remarked how talk of doom and gloom has quelled talk of $190,000 salaries for first-years at New York firms.
Greg Bowman at the Law Career Blog discusses the impact on associate salaries here. Bowman notes that law firms won't lower salaries as a result of expected downturn, but instead, will simply stop upping them annually. And he notes that since firms have already been cautious about hiring associates, when the economy does turn around (as it always has historically), those associates who remain employed will be very busy.
Finally, over here, the Estrin Report theorizes that paralegals will be hit hard as well:
While the Pollyannists who in the last downturn predicted an opportunity for bankruptcy and litigation practices predicted the same opportunity for this upcoming downturn, no one seems to realize that those corporate paralegals trained in M&A are most likely NOT trained in bankruptcy or litigation.
Consequently, Estrin recommends that paralegals should acquire cross training in a recessionproof practice specialty outside of the corporate area -- and should start doing so now, before "the other shoe drops."
Posted by Carolyn Elefant on August 28, 2007 at 07:28 PM | Permalink
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