Big Law Looks to Correct Pandemic ‘Over-Hiring’ With Layoffs

Layoffs at Big Law firms are on the rise, and they may continue into the new year. The layoffs appear to be focused mainly on correcting over-hiring that occurred during the pandemic boom, however, according to industry analysts and recruiters.

“The firms that are seeing the biggest impact are the ones that over-hired last year and now that work has slowed,” said Summer Eberhard, a partner at recruiting firm Major Lindsey & Africa. “They hired so many attorneys that they don’t have the work to give them and so hours are extraordinarily low.”

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Cooley LLP recently laid off a number of lawyers (the exact number is unknown), and Kirkland & Ellis has also axed many midlevel associates in the preceding months. Kirkland was among the best-performing firms and biggest hirers during the pandemic.

Meanwhile, AmLaw reports that Gunderson Dettmer, a Northern California-based tech-focused firm, has also cut associates after already delaying the start of its incoming first-year associate class.

Cooley and Kirkland said the cuts were the result of an annual review process, and many firms will likely say the same as layoffs accelerate across the industry. However, the cuts were likely actually a response to a steep drop in demand for work this year, particularly in IPOs and M&A.

“As firms conduct their normal review process in January, there is always the ability to be a bit stricter than you might be in boom times,” said Tom Sharbaugh, former managing partner of operations at Morgan Lewis & Bockius and current professor at Penn State Law. “But it’s too early to predict doom and gloom.”

So as to avoid a backlash in recruiting, many firms will like employ this “stealth layoff” strategy, couching any reductions as performance related rather than admitting to cutting associates for financial reasons.

Unfortunately for associates, these stealth layoffs can leave them questioning whether they were let go for financial or performance reasons — and leave potential future employers wondering this too.

While it’s likely many, if not most, firms will end up trimming the fat to some degree in the coming months, even if the economy does slip into a severe recession, it’s possible they will not engage in mass layoffs, according to James Park, a professor at UCLA School of Law.

The difficulty finding enough lawyers following the most recent recession is still fresh in the minds of many managing partners, and even more recently, they’ve struggled to retain midlevel and entry-level associates as the pandemic changed lawyers’ work-life preferences.

“They need associates and I think they’re still going to need associates,” Park said. “Given that reality, I have some hopefulness that we won’t see the sort of adjustment we saw the last time around.”