In recent months, lots of articles have suggested that stealth layoffs are looming around the corner. "Stealth layoffs" are when a firm uses performance-based dismissals to mask a headcount reduction. But I suggest we resist the urge to label every dismissal or exit as a stealth layoff. And - going out on a limb here - I really don't think the recent market slowdown will result in widespread layoffs in Big Law. Here's why.
First, some performance exits are just that. Underperforming associates may be able to hang on during a particularly busy time - firms need bodies, even if those bodies must be more closely supervised. When the workload starts to normalize, the weak links are exposed. Associates who aren't meeting minimum requirements may be asked to leave - but not as part of a larger plan to reduce headcount. When done responsibly, this is simply solid business practice - not a stealth layoff.
Second, stealth layoffs have historically happened in connection with massive and unforeseen disruptions, such as the financial crisis of 2008. But that is not the case now. No firm thought the tidal wave of work generated during the pandemic would last forever, and firms have been taking steps to prepare for an eventual slowdown. So, it's a mistake to assume that firms are deer in the headlights here. Finally, firms don't like laying off associates (or anyone, for that matter!). Sure, it saves money - but at a pretty significant cost to a firm's reputation, attorney morale, recruiting power, and more. It can take years to recover, and many law firm executives still remember the lasting effect of that from 2009. As a result, I think firms will try to cut costs in other areas before turning to layoffs. A market slowdown can be unnerving. But I think we should take a breath before assuming that every exit is a stealth layoff.
By: Kandice Thorn, Founder, WorkBetter for Lawyers
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