Staff cuts and short-term thinking

That sound you hear is the rapidly accelerating crash of dominoes. The mainstream legal media is tracking, body blow by body blow, the shocking personnel reductions taking place at law firms throughout the US and UK. One after another, firms are laying off employees, and it seems each firm’s announcement gives three others the confidence to go ahead and announce their own. I’ll be exploring this in greater depth in a post early next week, but for now, I wanted to point out an interesting subtext in all these cuts: the extraordinarily high rate of staff-alone layoffs.

It’s not just that firms firing lawyers are also firing two to three times as many non-lawyers; an unusual number of firms are firing only staff. Here are just some of the staff-alone cuts reported in the last couple of months: 9 at Squire Sanders, 14 at Ice Miller, 20 at Moore & Van Allen, up to 25 at Buchanan Ingersoll, 30 at Fish & Richardson, 36 at Fenwick & West, 38 at Cassels Brock & Blackwell, 40 at Goulston & Storrs, 60 at Edwards Angell Palmer & Dodge, 65 at Akin Gump, 72 at Dechert, and an astonishing 106 at Ropes & Gray and 115 at Reed Smith. Remember, these aren’t part and parcel of bigger, organization-wide cuts — each of these firms let go of staff, but no lawyers.

The official reason for these layoffs, of course, is the recession, though the actual causes and motivations will vary from firm to firm. But a staff cut without a corresponding lawyer reduction is a little odd. If a firm chops 30 or 40 associates, you expect to see another 60 to 90 staff go with them, on the theory that these support staff no longer have lawyers to support. So what does it mean when a firm jettisons scores of staff members but leaves the lawyers untouched? Beyond the well-known fact that many firms view and treat their staff the same way golf and country clubs do?

One possibility is that firms have to cut fixed personnel expenses somewhere, but they fear the recruitment black eye that comes from associate layoffs and the seismic impact of partner cuts, so it’s the secretaries, paralegals, IT and marketing people who get the heave. Another is that these firms were overstaffed to begin with, not an unreasonable guess — everyone was living large in the recent boom times, and if a one-to-one ratio of lawyers to assistants made some of the fee earners happy, it was all worthwhile. A darker possibility — that associates are keeping the administrative tasks to themselves to maintain their billable hour totals, depriving assistants of work — is all too likely.

It’s also very likely that in many of these cases, the firms either don’t realize or don’t care about the negative effects of deep, across-the-board staff cuts. Aside from the damage to morale, chopping people in key areas like marketing is just foolish, a reflection of the belief that marketing is a cost center, not an essential element of the firm’s business model. Ron Friedmann rightly points out, in two recent posts, that indiscriminate staff cuts reflect the fact that the “firm has no idea what support is really required. Evenly distributed cuts imply that rational decisions were made in the past, that support needs remain constant over time in spite of the march of technology, and that wild gyrations in practice group revenue have no impact on support needs.”

It looks like many firms are missing an opportunity here to carefully and intelligently review their support needs and re-engineer both their personnel and their infrastructure investment accordingly. Simply cutting staff jobs provides only a short-term bottom-line assist while creating many other short- and long-term problems, whereas a more creative approach could both save money and improve the firm’s operations at the same time. Here are just a few possibilities:

  • Equip every lawyer with voice-recognition software, so that memos and messages need no longer be dictated or even typed out. Ditto for real-time docketing and billing programs.
  • Get lawyers blogging about their areas of practice, the release of relevant decisions, changes to applicable laws, and more — instruct them in 21st-century personal marketing.
  • Outsource or offshore functions like human resources, IT or even research and other quasi-legal tasks — firms have already done this, from West Virginia to India.
  • Then, save jobs through upsizing: convert legal secretaries to workflow managers, specialize assistants by assigning them to practice groups, train marketers to conduct client meetings and do cross-selling — basically, give your non-lawyer employees the chance to show what else and what more they can do for you, rather than automatically putting them first in line on the chopping block.

There’s a better way to cut costs than simply throwing staff overboard while keeping lawyers around — all it requires is a little more ingenuity, far-sightedness and courage than law firms are used to showing. And as 2009 unfolds, we’re going to see all three of these traits evolve from nice-to-haves to full-scale survival skills.


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