More Associate Cuts Ahead Thanks To Biglaw's Negative Financial Outlook
You can expect more aggressive performance reviews from here on out.
Firms are reluctant to shed recently recruited lawyers, but reliance on natural attrition and repurposing associates has not provided satisfactory results; thus, we’ve begun to hear of more demanding performance reviews to manage utilization.
Capacity utilization remains firms’ biggest challenge near-term, [but] formal layoffs do not yet appear to be a pervasive consideration.
— An excerpt from the Wells Fargo Legal Specialty Group’s nine-month survey report, where it’s noted that stealth layoffs are likely to continue due to multiple financial indicators heading south through the third quarter, like net income (down 7.3%); profits per equity partner (down 8.5%); demand (down ~1%); and productivity (down 5.3%). Owen Burman, senior consultant for the legal specialty group, noted that the average number of lawyer billable hours had dropped to 1,592 on an annualized basis (compared to 1,611 at this year’s six-month mark, and ~1,636 before the pandemic in 2018 and 2019). “Those are just not satisfactory levels of performance, so that’s why we’re starting to see this talk about more aggressive performance reviews,” he told the American Lawyer.
Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.
