Unless you've been living under a rock the past couple of months, you know that STEALTH LAYOFFS ARE UPON US. At least, that's what the headlines would lead you to believe.
But the story is more complicated than a headline, and if you dig a little deeper, you just might find that there isn't evidence of stealth layoffs - at least not now.
If that's the case, why do so many people seem convinced that's what we're experiencing? How did we get here? And if not stealth layoffs, then what is happening? I invite you to keep reading...
First, a reality check: Law firms do fire associates (sometimes...)
Law firms don't give the "look to your left, look to your right" speech at new associate orientation... but the truth is that not every associate will meet their firm's rigorous standards in the long term. There are many reasons for this, and it is certainly not an indictment of an associate’s intelligence, value, or ability to succeed in another setting.
Before letting a struggling associate go, a law firm will typically give the associate guidance and coaching to remediate the problem. If those efforts fail, a firm usually moves to exit the underperforming associate gently. This process can take a couple of months or longer and involves releasing the associate from their matters while offering support to look for their next job. During this time, the associate continues to receive pay and benefits, retains their office, and maintains their profile on the firm’s website.
Of course, individual firm practices and policies vary, but most firms follow some variation of this process.
How does this relate to "stealth layoffs"?
In "normal" times, this process happens under the radar. You probably wouldn’t know if someone was “exited” or left of their own volition. This is by design and is mutually beneficial to the associate and the firm.
But when the economy gets shaky, these routine exits suddenly look ominous and become the source of foreboding and alarmist headlines. That's because, in 2009, many firms used this "exiting" process as a cover to mask intentional headcount reductions and lay off large numbers of attorneys - the dreaded "stealth layoff."
But I think an important point here is that in 2009, the stealth layoff was more than just an exit with a performance justification during a bad economy. There was an extra ingredient: using the exits to hit a headcount target, fabricating performance issues to exit associates, etc. The implication was that the "performance" justification was a false front.
In 2009, the evidence of this "extra ingredient" was in the sheer numbers. It simply wasn't rational that 15% of any firm's associates were underperforming. This was backed up by accounts of the many, many affected associates. The firms may have tried to be "stealthy," but it was pretty hard to get this one to fly under the radar.
So, what has happened since?
Since 2009, reports of stealth layoffs have been much more speculative. A sensitivity to performance-based exits during a down economy has led to an assumption that they are solid evidence of stealth layoffs. But this isn't the case - that extra ingredient is missing. And so far in 2022, I haven't seen any convincing evidence that it's there.
Take this week's story about Kirkland & Ellis. Apparently, 20-25 Kirkland lawyers were told to "start looking."
I admittedly have no inside scoop on what's happening at Kirkland. But I do know that it's a firm of nearly 3,000 lawyers. 20-25 is a VERY small number in this context. By comparison, it's nowhere near the 500ish you'd need to get close to the 2009 equivalent of 15-20% of their attorneys.
I have seen nothing reported, up to now, that makes me think these 20-25 associate exits are anything other than entirely routine, unalarming, performance-based decisions. As for the affected associates, I wish them the best and hope they all find success in new positions that suit them well and bring them happiness. As I said before - and I truly believe - this is no indication of their ability to thrive in a different environment.
So what's next?
More of these stories will certainly emerge in the coming weeks. We're in review season and firms will definitely be exiting some associate as they always do. Whether or not a clear picture of actual stealth layoffs will emerge remains to be seen. I still think it's unlikely, but if it happens, I'll swallow my words. In the meantime, I hope we can all keep cool heads and interpret the evidence that's out there realistically with the proper context.
By: Kandice Thorn, Founder, WorkBetter for Lawyers
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