Latham, law firm layoffs, and the recovering economy

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seriouslyinformative
Posts: 285
Joined: Sun Jun 05, 2011 9:48 pm

Re: Latham, law firm layoffs, and the recovering economy

Postby seriouslyinformative » Sun Jul 03, 2011 11:45 am

Renzo wrote:
Bronte wrote:Seriouslyinformative, did you really just post ten times in a row?



Seven, by my count. But that still seems ban-worthy.


If it wasn't spam, then why does it matter???

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Bronte
Posts: 2128
Joined: Sun Jan 04, 2009 10:44 pm

Re: Latham, law firm layoffs, and the recovering economy

Postby Bronte » Sun Jul 03, 2011 11:58 am

Obviously I am intentionally distorting your view a little bit to goad you. Don't you think your obnoxious persona warrants as much? I think your position has morphed a little bit throughout the thread. But your last post is reasonable enough. As long as we're done saying that layoffs have no effect on reputation, I'm on board.

seriouslyinformative
Posts: 285
Joined: Sun Jun 05, 2011 9:48 pm

Re: Latham, law firm layoffs, and the recovering economy

Postby seriouslyinformative » Sun Jul 03, 2011 12:05 pm

But your last post is reasonable enough. As long as we're done saying that layoffs have no effect on reputation, I'm on board.


LOL, son, I never said it has no effect on reputation. I was just differentiating reputation in terms of perspective. Again, layoffs have no effect on the reputation from the perspective of partners and clients, which–in terms of rankings and how "good" the firm is"–is all that matters. Maybe that'll change in the future as current associates become partners or whatever. But for now, Latham is still a top firm. As far as this thread is concerned, I've just be repeating myself a hundred or so times. I guess you finally took the time to read my posts instead of jumping to conclusions.

Don't you think your obnoxious persona warrants as much?


I don't know what's more obnoxious: Me being condescending to you, or a rising 2L who has strong opinions on law firms.

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rayiner
Posts: 6184
Joined: Thu Dec 11, 2008 11:43 am

Re: Latham, law firm layoffs, and the recovering economy

Postby rayiner » Sun Jul 03, 2011 12:14 pm

While I agree with the gist of seriouslyinformative's comments, I think he's making things seem more black-and-white than they are. Laying off tons of first years may or may not be a good thing for partners.

Modern law firms make big profits through high leverage. While partners may not care about any specific associate, they care about associates in general, because without that 3-4x leverage ratio, they could not sustain $2m+ PPPs. That's why they pay $160k and bonuses and wine and dine SAs. Not out of the goodness of their hearts, not for prestige, but because in a good economy attrition is a constant worry. Summer class size, salaries, and bonus are in equilibrium with attrition. They're set at the point where if the firm was to cut expenses by reducing summer class sizes any further their attrition would go up and they would incur more expenses in retaining associates in order to maintain their leverage ratio.

So what happens when work dries up? Firms can either keep around a bunch of associates not working at maximum capacity (which has a cost), or they can fire them and try their hand at the lateral market down the line (which also has a cost). Some firms did the former. If you look at the NALP sheets for say S&C, you'll see that their leverage ratio ballooned during the recession. That certainly cut into profits for those couple of years. Their gamble was that the hit in profits would be smaller than what it would cost to play in the lateral market down the line when the economy picked back up. Other firms did the latter. Latham's leverage went way down during the recession. Now who knows which option was best for which firm, but let's not pretend the latter option is without cost. Latham is recruiting like anything right now. Here at NU they might be one-third to one-half the interview slots for all of 3L OCI. Between recruiting expenses and not being able to take advantage of available work, that's definitely impacting their bottom line.

As for working for Latham, I wouldn't necessarily turn down a Latham offer. They do top-notch work and have some extremely interesting clients. But also be cognizant of the fact that law firms are not all managed identically. Some are run more conservatively (like Gibson), some are run more aggressively (like Latham). Latham increased their leverage out of line with their peers during the boom, and paid for it during the bust. That risk-taking may or may not pay off for partners, but given that bonus amounts are largely uniform throughout the industry, it probably doesn't make sense for associates. If I had a Gibson offer in hand and a Latham offer, I'd certainly take the former.

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thesealocust
Posts: 8446
Joined: Mon Oct 20, 2008 8:50 pm

Re: Latham, law firm layoffs, and the recovering economy

Postby thesealocust » Sun Jul 03, 2011 12:29 pm

Agree strongly with Rayiner's post. One other interesting anecdote is that Latham had a stellar reputation as a place to work before it fired everyone. It was the most popular firm at my school, was widely regarded as friendly / quirky / up and coming, etc. I think for those old enough to remember (and I'm not, I just researched the past) that lended it a strong feel of bait-and-switch.




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