Adam Smith, Esq. isn’t in the business of covering—or typically even commenting on—late-breaking news, but there’s news and then there’s news.
To the affected associates and staff: Nothing comforting or reassuring can be said—this is dreadful, awful, horrible, bad bad news for you—but if you can gain perspective after awhile, remember that in America it’s no sin to be knocked down; the sin is not getting right back up.
At this point in the story sportscasters would say “let’s go to the videotape,” but here we say, “let’s go to the numbers.” (And shall we note for the hygiene of the record that these were the antithesis of stealth layoffs—small kudos, at least, are in order for that.)
- 110 staff, about half secretaries, were let go, on a total staff headcount base that wasn’t disclosed, but this probably is on the order of mid single digits in percentage terms;
- 60 associates will be gone as well, out of just under 900, so call it 7%;
- and “Annual compensation will be reduced for roughly 30 of the firm’s 300 partners, in many cases by hundreds of thousands of dollars.”
According to the 2013 AmLaw 100 (the most recent available), Weil as of late last year had 195 equity and 112 non-equity partners, so the cuts to partner compensation are hitting a slightly higher percentage of partners (call it 10%).
Somewhat buried in the fully disclosed firm-wide memo announcing the decisions—at least I haven’t seen any other publication covering it expressly—was this line, pregnant with implications: “there will have to be meaningful compensation adjustments for certain partners in light of the economic realities of the new normal. It may well be that some of these partners will decide to pursue other opportunities (emphasis mine).” In plain English, the firm isn’t bluffing. The American Lawyer‘s online report underscored this expectation:
Some of [the partners] affected can expect their pay to be reduced by two or three of the firm’s 15 compensation “bands,” according to Wolf. One former litigation partner, speaking on the condition of anonymity, said such a reduction could cost an individual partner between $200,000 and $500,000 a year.
Another former Weil partner suggested that the move could lead to a thinning of the partnership ranks. “Those are probably partners they would not mind leaving the firm,” this former partner said.
We can all hasten to add that taking a cut in presumably very generous compensation beats being unemployed with a stick, but it’s still news in Law Land, as Peter Lattman gently educated his readers in the lead paragraph of his coverage:
Layoffs are a brutal reality of corporate America. During fallow periods, publicly traded companies, including the big banks, routinely cull their ranks. The country’s largest law firms, by contrast, have historically taken a kinder, gentler approach, rarely firing employees en masse.
The news on Monday that Weil, Gotshal & Manges, among the nation’s most prestigious and profitable law firms, was laying off a large number of lawyers and support staff while also reducing the pay of some of its partners, sent shock waves through the industry and underscored the financial difficulties facing the legal profession.
What else do we know?