Law Firms and Layoff Announcements

A story in The National Law Journal points to how law firms announce layoffs -- or shoot down the rumors -- in this fast-moving world of online blogs and news sites.

It's never easy for law firm leaders.

As reporter Karen Sloan correctly pointed out: "Firms in downsizing mode must decide if and how to go public with layoff news, which can make a firm appear weak and unstable."

The article also showed that even the best-laid plans can be thwarted with one leak to an influential legal blog that often prevents law firm management to tell its side of the story.

But that raises another current issue: being honest about why the layoffs happened. Unfortunately, a few managing partners continue to insist that layoffs were performance-based rather than because of  a decline in business.

Law firms and their clients know that law firms often operate in cycles where one practice does great for a few years while others fall behind before economic conditions reverse the cycle. It's happening now with increases in bankruptcy work and a decline in M&A work as one of many examples.

Major law firms with multiple practice areas should not be afraid to admit that economic conditions have resulted in layoffs -- as long as the reductions in force were done with sensitivity and integrity.

Prospects and clients  face the same challenges as their outside law firms in these tough economic times so they will probably admire the firm more for responsibly reducing costs.

Firms might also use a layoff announcement in this climate as an opportunity to tell clients that they will now receive even more attention from senior associates and partners without incurring massive increases in their legal bills.

Whether that information goes public or not, it certainly will enhance any firm's reputation with clients and prospects.