Reason Not to Go to Law School #38

Your boss will sacrifice your career just to avoid the littlest of blips on their balance sheets.

In 2009, major law firms laid of 4,633 attorneys and 7,563 staff members.  This does not count smaller firms not covered in mainstream legal news, stealth layoffs, deferred start dates, and reduced offers.

Many of those people on whom the ax dropped had their lives turned completely topsy-turvy.    A lot of lawyers have been unable to find jobs, even after sending out many hundreds of applications.  Others have been forced to move back in with their parents, like yours truly, which often means leaving the state in which you’re admitted to practice, taking another bar, and spending a whole lot of time unqualified to practice while getting re-admitted.  Junior associates are particularly screwed.  They have less savings, and little valuable experience.  Firms go to law schools to look for junior associates.  It’s rare for firms to look for people with 0-2 years of experience.

Even people who have kept their jobs are seeing decreased salaries and disappearing bonuses.  With how hard associates were hit, you have to wonder how much bleeding there was at the partnership levels.  And as it turns out, not much at all.

According to a report from the Zeugheuser Group, gross revenues are down 3.8%, and profits per equity partner have dropped only 0.8%.

Now, like any other business, law firms are perfectly free to shed weight to increase or maintain profits.  However, the right to fire at-will employees does not entail the right to be free from criticism for making those decisions.

8 firms reported profits per equity partner of at least $2 million for 2009, with Quinn Emanuel taking the cake at a whopping $3.1 million.

[Edit: Really screwed the pooch on the math in this next part the first time around...]

To put these numbers in perspective, in a firm with $1.6 million in profits per equity partner, canning 1 first year associate saves 10 partners 1% of their profits.  Firms don’t publish a lot of information about the number of equity v. non-equity partners, but odds are firms are saving much less than 10% of profits.

Despite being in their rights to lay off associates, it’s pretty douchy to say to the highest cost bearer that they need to take a potentially 70, 80, or 90% cut in income, just so the equity partners will lose so little money they won’t even notice.

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2 Responses to “Reason Not to Go to Law School #38”

  1. Alpha Dude Says:

    Glad Im not at the firm any more either. Bunch of wimps!

  2. Anonymous Says:

    “And, just to put these numbers in perspective, if a firm has 10 equity partners and profits per equity partner of $1.5 million, that firm could save the jobs of 9 first year associates and only take a 1% hit to profits.”

    Only if the first-years only make 16 grand a year.

    [Whoops. Will fix whenever I feel like getting around to it.]

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