15 Warning Signs Your Firm May Be Laying Off Staff

J0308871 The Wall Street Journal Blog this morning reported that DLA Piper on Wednesday laid off 121 people — 21 lawyers and 100 staffers. The news bring the total number of layoffs at DLA to 440 in the U.S. and U.K.  Here is part of the DLA statement to the firm:

"During the last year, we have experienced the worst economic period in generations. We have carefully gauged its impact on our business and responded by closely scrutinizing and reducing all of our material expenses across the board. We also reduced our workforce in February, attempting to preserve as many jobs as possible while avoiding any further reductions later in the year. Unfortunately economic weakness has continued, demand across the legal sector remains soft, and it is increasingly clear that major improvements in the US and global economy will not occur before 2010. We have therefore regretfully concluded that we must reduce our ranks now by 21 associates and 100 staff. While the firm’s financial position remains strong, a tightly-managed cost structure is essential to compete effectively during these uncertain times. We value all of our people and are very grateful for their contributions to the firm, and we have worked hard to consider and employ every reasonable measure to avoid lawyer and staff reductions."

Even though the media has concentrated on the number of attorney layoffs in major firms, it appears that the hardest hit are actually the staffers including paralegals.  According to Law Shucks, the BigFirm layoff tracker, the number of layoffs since the initial Cadwalader move early last year stands at 5,026 lawyers and 8,001 staffers.

Law.com weighed in with consultant Peter Zeughauser.  "It's nothing special about DLA, it's just an indication of what's to come," said Zeughauser, of the Zeughauser Group. "I think you'll see other firms turning to similar measures." "They are so accustomed to a talent shortage. The idea that they will be able to hire people back when they need them, they are not as comfortable with that as other businesses," Zeughauser said.

A managing partner of a national firm who declined to be named said late summer and fall will be the next layoff season. "I think the recovery will stall," the managing partner said. "Firms will act decisively to protect from a huge hit to profitability. They'll trim in late summer or fall so they can prepare for a rebound next year. The smarter firms will cut associate compensation, because it's a better long-term solution."

We understand that mid-size and small firms basically are doing well.  More business has filtered through to smaller firms due to the cost-effectiveness, lower fees, ability to manuever quickly, and frankly, better client service overall. 

If you are a paralegal in a firm unaware whether layoffs are coming down the pike, here are a few signs that may sound the warning bell:

1.    Budget cuts in otherwise normal expenses such as office supplies, printing, coffee, soda, etc.
2.    Budget cuts in areas normally considered a perk such as paid parking, low co-pay insurance, days off, vacation, seminars, association dues, subscriptions, gym, free lunches and definitely bonuses.
3.     Lack of raises throughout the firm.
4.     Travel budgets severely cut.
5.     Salary cuts. Overtime restrictions.
6.     Hiring freeze or recruiting fees cut.
7.     Partners leave.
8.     Office space in the firm is available for sublease.
9.     Staff attrition:  Employees who leave on their own are not replaced.
10.   Paralegals are doing more associate work.
11.   Firm is looking to merge or be acquired immediately.
12.   There are suddenly lots of "closed door" partner meetings.
13.    Associates are doing more paralegal work.
14.    Unbelievable pressure is put on associates and partners for new client development.
15.    Entry-level paralegals are hired while senior paralegals are squeezed out.

While it may seem that your firm is "just fine" because management tells you so, at least be aware of your surroundings and what the signs are telling you.  It is never a good thing to be broadsided or taken by surprise by a round of layoffs that, had you been watching, you might have known was coming.  Put yourself in a position to at least be in the process of taking care of yourself and have already started your job hunt.  These days, it's better to take precaution than to be one of the unsuspecting shown to the door on Friday at 4:00 p.m.