Change my mind: Layoffs and no-offers should happen in biglaw

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bluedolphin

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Change my mind: Layoffs and no-offers should happen in biglaw

Post by bluedolphin » Fri May 22, 2020 11:31 am

I'm sure everyone has seen the Kirkland Houston email that has been floating around and I am going to take a controversial view here - but I agree.

The biglaw compensation scale makes job security a risk that employees take on. For things to change, biglaw salaries should drop significantly and move to a bonus scale. Instead of 190 + 10, the scale should look more like 120 + 120. There is no reason why a services driven profession like biglaw should have such high base salaries and lockstep bonuses. High salaries and small bonuses makes it extremely difficult for services businesses to adapt because they have such high compensation costs.

This board vilifies biglaw firms that lay off lawyers and no offer summers - this is the business model, this is what we signed up for, this is why we push for 200k a year associate salaries. Entering biglaw is a risk/reward, all who are associates now and saw what happened in the GFC. For many, you are 3-5 years post undergrad, taking in a 190k + base salary, this is higher than the total comp many people who are company level directors (not board) at massive companies with 15+ years of experience.

For lawyers who are four to five years into their career, you are pushing VP level total compensation numbers, and most people won't even make it there.

For firms that no - offer summers due to work product - this should be the business model and not an aberration. 75-90% offer rates should be the norm, not 100%.

For biglaw firms that lay-off lawyers due to business reasons, it is what it is, this is part of the reason of why lawyers earn such high base salaries.

If you want a lessened job security risk there, take a comp hit, move to a safer legal/compliance role with the government/in-house. Loans is usually the protest here, and yes I get it, but that was a decision you made to take on when you went to law school/didn't work through school/didn't take the slightly lower ranked school for more money. Most T14 grads can probably get full rides at T25s. If you have less than 6 figures in loans, most in house legal and fed jobs can service those.

For biglaw firms that pay peanuts to their staff (paralegals, legal assistants) and conduct layoffs/furloughs/cuts there first. That is shit.

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Yugihoe

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by Yugihoe » Fri May 22, 2020 11:36 am

You're missing the part where if those kinds of salaries were offered the way you suggest, then law schools can't and should not demand tuition that is 50-60k/year.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by JusticeJackson » Fri May 22, 2020 11:51 am

I think you’d change your mind if you were suddenly laid off.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by hdr » Fri May 22, 2020 11:59 am

You should join the management committee of your firm and try to make those changes then.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by Anonymous User » Fri May 22, 2020 12:04 pm

Yugihoe wrote:
Fri May 22, 2020 11:36 am
You're missing the part where if those kinds of salaries were offered the way you suggest, then law schools can't and should not demand tuition that is 50-60k/year.
You do realize that the proposed total compensation range ends up being higher total than current. Its just less weighted to base, which is the way many highly compensated industries work.

Most schools are probably closer to 30-40k on a scholarship adjusted basis. If people are paying full tuition, thats a decision they made and have to live with instead of going to the school ranked 10 below.


This is OP, accidentally anon.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by jackshunger » Fri May 22, 2020 12:05 pm

I think we found that former Ropes COO's TLS burner

bluedolphin

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by bluedolphin » Fri May 22, 2020 12:09 pm

JusticeJackson wrote:
Fri May 22, 2020 11:51 am
I think you’d change your mind if you were suddenly laid off.
I mean I wouldn't be happy if I got laid off, but its an inherent part of the business model and the base salary.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by bluedolphin » Fri May 22, 2020 12:16 pm

hdr wrote:
Fri May 22, 2020 11:59 am
You should join the management committee of your firm and try to make those changes then.
I don't work in biglaw anymore - I am in a different industry that has that type of comp model.

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beepboopbeep

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by beepboopbeep » Fri May 22, 2020 12:24 pm

What's in it for us? Why should we care what your opinion is? Do you make biglaw layoff decisions?

I think you misunderstand the "villifying" of layoff firms. I've never understood it to be a "firms should never lay people off" argument. It's that (1) firms that lay people off are less financially secure or are otherwise more vulnerable to downturns, and students should try to avoid them compared to firms that are better-positioned to weather storms, and (2) firms will often publicly say they are not laying people off, but will "stealth" associates by making up performance reasons, which is a dick move. "This is just economics" is not really an answer to either.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by M458 » Fri May 22, 2020 12:28 pm

bluedolphin wrote:
Fri May 22, 2020 12:16 pm
hdr wrote:
Fri May 22, 2020 11:59 am
You should join the management committee of your firm and try to make those changes then.
I don't work in biglaw anymore - I am in a different industry that has that type of comp model.
Does your name rhyme with Few K. Timmons?

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by bluedolphin » Fri May 22, 2020 12:37 pm

beepboopbeep wrote:
Fri May 22, 2020 12:24 pm
What's in it for us? Why should we care what your opinion is? Do you make biglaw layoff decisions?

I think you misunderstand the "villifying" of layoff firms. I've never understood it to be a "firms should never lay people off" argument. It's that (1) firms that lay people off are less financially secure or are otherwise more vulnerable to downturns, and students should try to avoid them compared to firms that are better-positioned to weather storms, and (2) firms will often publicly say they are not laying people off, but will "stealth" associates by making up performance reasons, which is a dick move. "This is just economics" is not really an answer to either.
I don't make layoff decisions but do make firm level biglaw firm hiring/firing recommendations to investment leaders. This came up when disputing a bunch of parts of a bill relating to first/second year associates from one of major law firms.

Partner communicated issues with significant quality issues of first year associates because they had to hire 100% of their class without seeing work product.

I agree that stealthing sucks on a personal basis, but its inherently tied to (1). JPM/MS/Evercore still lay off people and people still kill themselves to work there. Biglaw comp isn't that far off banking these days and its significantly easier to get into biglaw.

Lathaming still is a term and a reason why people say don't go to Latham, even though realistically their severance packages were extremely generous.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by 12YrsAnAssociate » Fri May 22, 2020 12:43 pm

beepboopbeep wrote:
Fri May 22, 2020 12:24 pm
What's in it for us?
Tangential to this point, why not vilify firms for conducting layoffs? It seems like publicly shaming firms for acting only in their best interests is all in all a good thing for law students and associates, and is probably the only leverage those two groups have.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by malibustacy » Fri May 22, 2020 12:48 pm

No offense, but no one cares about what a midlevel in-house lawyer has to say about the issue.

If you don't like it, hire amazing firms like Cadwalader that regularly no offer summer associates, cut associate pay and lay off attorneys at the slightest sign of an economic downturn. Only the greatest legal talent left in their ranks right? Guaranteed you'll get the best lawyers that way.

I'd bet that at least 1/3rd of the firms that cut salaries won't be alive to see 2030.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by hdivschool » Fri May 22, 2020 12:53 pm

Firms won't adopt your model because they can't. The competition for talent is too fierce. Firms with more variable compensation and higher rates of layoffs and no-offers will be less attractive options for risk-adverse law students.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by 12YrsAnAssociate » Fri May 22, 2020 12:58 pm

bluedolphin wrote:
Fri May 22, 2020 12:37 pm

I don't make layoff decisions but do make firm level biglaw firm hiring/firing recommendations to investment leaders. This came up when disputing a bunch of parts of a bill relating to first/second year associates from one of major law firms.
What if you learned that the firms that don't have 100% offer rates usually aren't super competitive at OCI, and therefore aren't able to attract the lawyers with the best resumes?

This obviously breaks down some--Latham can still bring in top talent. But if you look at the ATL no offer rates every year, there's absolutely correlation.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by bluedolphin » Fri May 22, 2020 1:04 pm

hdivschool wrote:
Fri May 22, 2020 12:53 pm
Firms won't adopt your model because they can't. The competition for talent is too fierce. Firms with more variable compensation and higher rates of layoffs and no-offers will be less attractive options for risk-adverse law students.
Its a swing, if you have the opportunity for significant out - performance comp wise with some salary stability. I'd rather work for a firm that is at 120 +120 than one that is 190 + 10. The extreme of course is starting your own shop, but if you can give some stability with the opportunity to really outperform at the top I think that model is significantly better. You can survive in any city in the US on a 120 base, especially coming from 0 as a law student.

What I'm proposing is basically a Kirkland model on steroids.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by beepboopbeep » Fri May 22, 2020 1:08 pm

bluedolphin wrote:
Fri May 22, 2020 12:37 pm
I don't make layoff decisions but do make firm level biglaw firm hiring/firing recommendations to investment leaders. This came up when disputing a bunch of parts of a bill relating to first/second year associates from one of major law firms.

Partner communicated issues with significant quality issues of first year associates because they had to hire 100% of their class without seeing work product.
Is your position that biglaw firms that lay off or stealth associates are going to end up better off along some axis -- work product, future financial stability, etc.? If so, you're in a position to do a natural experiment: check which firms that your company hires are on ATL's list and which aren't. Compare against their work for you. I'd be interested to know the results.

There are firms that don't follow the standard biglaw hire-sight-unseen model. Mostly small, sophisticated boutiques like Dovel & Luner, Bartlit Beck, Hueston Hennigan, etc. -- places that don't hire summer associates at all. Probably those firms don't do a whole lot of layoffs either. You could hire them instead of the standard biglaw corps and test whether they give you better results. I'd guess it's about the same (but cheaper), but only for cases they can handle. I'm less sure that firms like that exist for corporate work, but they probably do.

My prediction for the results of the experiments would be 12YrsAnAssociate is saying above. The firms not doing layoffs are already getting the best talent -- outside of the sophisicated boutiques, which can be even more credentialed -- and, accordingly, not having as big of financial issues.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by Monochromatic Oeuvre » Fri May 22, 2020 1:08 pm

What's your actual thesis here, bootlicker? Do you think you're the first person to suggest that Biglaw could treat its employees worse and still have a waiting list? I'm guessing the same is true of your job. No-offers wreck someone's chance of ever getting back into Biglaw. Layoffs are not quite as deleterious but, when they happen at a junior level, indebted associates often can't afford them. Why are you arguing for them? Partners feeling a little inadequate at the yacht auction this year?

Firms can conduct business how they want, but people who aren't sociopaths think millionaires should bear financial burdens before people who make 10-50x less than they do, and this board (and the rest of the Internet) takes, and should take, every opportunity to call out the ones treating employees like shit and tell other people not to go there and be treated like shit.

I've heard an onslaught of in-house bitching in my time, and yet you dickcheeses keep paying these ridiculous rates. Why don't you convince your bosses to stop using Biglaw and instead hiring Shingle and Yokel LLP for your needs? Most of my colleagues have been drowning in work their entire careers and would love to have one of their pain-in-the-ass clients off their plate. So why don't you come on here and tell us when you've given your "biglaw firm hiring/firing recommendations to investment leaders," and I'll come here and tell you to get fucked with a rake every time you do?

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by bluedolphin » Fri May 22, 2020 1:09 pm

malibustacy wrote:
Fri May 22, 2020 12:48 pm
No offense, but no one cares about what a midlevel in-house lawyer has to say about the issue.

If you don't like it, hire amazing firms like Cadwalader that regularly no offer summer associates, cut associate pay and lay off attorneys at the slightest sign of an economic downturn. Only the greatest legal talent left in their ranks right? Guaranteed you'll get the best lawyers that way.

I'd bet that at least 1/3rd of the firms that cut salaries won't be alive to see 2030.
Not a lawyer anymore. Wouldn't touch Cadwalader with a 10 foot stick, but do regularly use Latham for matters.

We regularly diligence our law firms for financial stability when we hire them as we many times use the same firm on entrance and exit, its actually come up that Latham is run extremely well as a business.

If it came up that say another one of our firms let go 10% of their lawyers, its not really an issue unless it includes the entire team we used. Our banking relationships lay people off regularly.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by jarofsoup » Fri May 22, 2020 1:28 pm

Summers and a lot of juniors generally suck. But doesn’t mean they don’t learn and get better the more the learn about how to be an effective associate maybe a year or two into it. Most people leave voluntarily or are pushed out when they get to senior.

The partner should write off time instead and it should have never gotten to you instead of throwing a junior under the bus to a client.

Some companies also are guilty of delegating ministerial talks to outside counsel and then getting upset that it cost 700 for a simple form to be completed. Nothing free when time is currency.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by 12YrsAnAssociate » Fri May 22, 2020 1:29 pm

bluedolphin wrote:
Fri May 22, 2020 1:09 pm

Not a lawyer anymore. Wouldn't touch Cadwalader with a 10 foot stick, but do regularly use Latham for matters.

We regularly diligence our law firms for financial stability when we hire them as we many times use the same firm on entrance and exit, its actually come up that Latham is run extremely well as a business.

If it came up that say another one of our firms let go 10% of their lawyers, its not really an issue unless it includes the entire team we used. Our banking relationships lay people off regularly.
I brought up Latham earlier, because Latham is an example of a firm that conducted mass layoffs a decade ago and mostly recovered from it. But keep in mind that for years and years it's had a 100% offer rate or very close to it (I believe a summer was fired for drugs a few years back). So it's not really entirely on all fours with your hypo. Would Latham have recovered in recruiting if it did regular no offers too? I really doubt it.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by bluedolphin » Fri May 22, 2020 1:38 pm

Monochromatic Oeuvre wrote:
Fri May 22, 2020 1:08 pm
What's your actual thesis here, bootlicker? Do you think you're the first person to suggest that Biglaw could treat its employees worse and still have a waiting list? I'm guessing the same is true of your job. No-offers wreck someone's chance of ever getting back into Biglaw. Layoffs are not quite as deleterious but, when they happen at a junior level, indebted associates often can't afford them. Why are you arguing for them? Partners feeling a little inadequate at the yacht auction this year?

Firms can conduct business how they want, but people who aren't sociopaths think millionaires should bear financial burdens before people who make 10-50x less than they do, and this board (and the rest of the Internet) takes, and should take, every opportunity to call out the ones treating employees like shit and tell other people not to go there and be treated like shit.

I've heard an onslaught of in-house bitching in my time, and yet you dickcheeses keep paying these ridiculous rates. Why don't you convince your bosses to stop using Biglaw and instead hiring Shingle and Yokel LLP for your needs? Most of my colleagues have been drowning in work their entire careers and would love to have one of their pain-in-the-ass clients off their plate. So why don't you come on here and tell us when you've given your "biglaw firm hiring/firing recommendations to investment leaders," and I'll come here and tell you to get fucked with a rake every time you do?
I actually agree with most of your points, I just don't think biglaw associates are in the place compensation wise to class yourself in with the rest of the people who make these arguments. Most biglaw associates, unless you went to school late are in the top 1-2% of their age bracket for income. How much more do you make than the janitorial staff at your office 6x, 7x? The legal assistants 3x?

Biglaw comp is high enough now, where it is the type of job that shouldn't have pure job security. Layoffs really suck, and really shouldn't happen to first years since they haven't had a chance to prove themselves, but beyond that inherent risk is part of the compensation biglaw associates earn. Earning 200k or whatever the comp number for first year isn't a right, its something that is earned.

I actually think alot of the associates I work with alot are underpaid, they make sacrifices on a personal level, where its likely they hit 2500 billables in a year, but full lockstep just fucks them. Maybe their comp that year was 220, it should be closer to 300.

Theres a reason why I noted that if you are laying off support staff first, thats shit. They are in the compensaiton position where they should have a secure job.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by bluedolphin » Fri May 22, 2020 1:45 pm

12YrsAnAssociate wrote:
Fri May 22, 2020 1:29 pm
bluedolphin wrote:
Fri May 22, 2020 1:09 pm

Not a lawyer anymore. Wouldn't touch Cadwalader with a 10 foot stick, but do regularly use Latham for matters.

We regularly diligence our law firms for financial stability when we hire them as we many times use the same firm on entrance and exit, its actually come up that Latham is run extremely well as a business.

If it came up that say another one of our firms let go 10% of their lawyers, its not really an issue unless it includes the entire team we used. Our banking relationships lay people off regularly.
I brought up Latham earlier, because Latham is an example of a firm that conducted mass layoffs a decade ago and mostly recovered from it. But keep in mind that for years and years it's had a 100% offer rate or very close to it (I believe a summer was fired for drugs a few years back). So it's not really entirely on all fours with your hypo. Would Latham have recovered in recruiting if it did regular no offers too? I really doubt it.
That is more the point, its an inherent issue with the industry. The summer really should lean more Cravath (a working Summer) rather than the current model. Peer professional services industries (banking/consulting) run on a model where they do no-offer over the summer. Offer rates are still high (70-90% at most banks), consulting I believe is the same, but I blanket offering 100% of summers - there are definitely people who probably shouldn't be hired even with the limited amount of work done during the summer.

Firms shouldn't be getting blackballed by students because they no-offer.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by beepboopbeep » Fri May 22, 2020 1:50 pm

Put this on the other shoe: why should students not coordinate to blackball non-100% offer firms? They apparently have the power to do so, since they do. And they gain an obvious benefit from 100% offer being the norm. What benefit would students gain from abandoning that norm?

If the argument is firms should just ignore it, well, lol. Some do. You can see how it works out for them.

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Re: Change my mind: Layoffs and no-offers should happen in biglaw

Post by bluedolphin » Fri May 22, 2020 2:06 pm

beepboopbeep wrote:
Fri May 22, 2020 1:08 pm
bluedolphin wrote:
Fri May 22, 2020 12:37 pm
I don't make layoff decisions but do make firm level biglaw firm hiring/firing recommendations to investment leaders. This came up when disputing a bunch of parts of a bill relating to first/second year associates from one of major law firms.

Partner communicated issues with significant quality issues of first year associates because they had to hire 100% of their class without seeing work product.
Is your position that biglaw firms that lay off or stealth associates are going to end up better off along some axis -- work product, future financial stability, etc.? If so, you're in a position to do a natural experiment: check which firms that your company hires are on ATL's list and which aren't. Compare against their work for you. I'd be interested to know the results.

There are firms that don't follow the standard biglaw hire-sight-unseen model. Mostly small, sophisticated boutiques like Dovel & Luner, Bartlit Beck, Hueston Hennigan, etc. -- places that don't hire summer associates at all. Probably those firms don't do a whole lot of layoffs either. You could hire them instead of the standard biglaw corps and test whether they give you better results. I'd guess it's about the same (but cheaper), but only for cases they can handle. I'm less sure that firms like that exist for corporate work, but they probably do.

My prediction for the results of the experiments would be 12YrsAnAssociate is saying above. The firms not doing layoffs are already getting the best talent -- outside of the sophisicated boutiques, which can be even more credentialed -- and, accordingly, not having as big of financial issues.
I work 100% with transactional/regulatory, we have used Bartlitt in the past but wouldn't going forward.

Wachtell is hands down the firm we'd had the best experience with on the corporate side when we use them which is pretty rare due to their fee model. Kirkland has historically been extremely good, in addition to Ropes, and Latham.

But more outside the legal sphere, on a consulting basis Alvaraz & Marsal has been lights out good and banking wise same goes for Evercore and both run heavy variable comp models where top performers really outperform.

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