At the Faculty Lounge, Dan Filler collects links to ATL posts that cover the recent wave of law firm layoffs. The notices are depressingly similar. Work is way off; the firm needs to position itself to remain competitive; etc. etc. etc. As is almost always the case, what the law firms don’t say makes for more compelling reading than what they do say. Hats off to the imaginary law firm that releases a statement along the following lines:
We admit it. We hired far too many new lawyers over the last few years and promised to pay them far too much, and we hired secretaries, paralegals, and law clerks to keep them all beavering away at their time sheets. We streamlined the partnership pyramid to maximize profits per partner and jettisoned clients that didn’t generate work that we could farm out to hordes of billable document reviewers. Now the piper has come calling. Work is drying up, and we’ve struggled to figure out what to do.
Priority one is client service, for clients that are still ticking and for clients that we hope will be ticking down the road. Think heartbeats, not explosives. We promise: Now and down the road, every client is job 1. Law is a service business.
Priority two is keeping our people employed. Being an associate attorney or a staff member at a law office usually means “at-will” employment, which means that we can fire people whenever we want, for any reason we want. But that’s heartless, and contrary to popular perception, we really do care about our people.
So the partners got together and took a vote. We’ve agreed to take a serious cut in our annual payouts, beyond even the cuts that were coming anyway on account of lower billings, in order to cover the salaries of as many of our current lawyers and staff as we can possibly keep on. We don’t want to throw anyone overboard if we can keep the ship afloat in other ways. Heck, if bailout recipients can get by on less than $500,000 per year, then the least we can do is cap our own income at that number — and we’ll probably come in well below that if need be.
That doesn’t mean that all of our associates will carry on at their current wildly overinflated salaries. If the ship is going to sail again and not just remain afloat, then all licensed staff will take a hit. If it comes to asking secretaries and paralegals to eat some salary, too, then we’re prepared to go there if necessary. We’re hoping that if we have to choose between firing people and keeping them at deals with lower pay, they’d rather stay with lower pay. But that’s a last resort. The professional staff didn’t ask for this, and it would be unfair to burden them with our screwups.
That is all.
A firm that did that could position itself very well down the road as starting attorneys realized that it was truly a team effort, rather than an exercise in maximizing returns to those at the top.
My question is: what is the marginal sacrifice a partner would make to keep employment more steady at his or her firm?
As the Institute for Policy Studies has suggested in other contexts, I think that figure is very low. The general assumption now is that wages will ratchet down for those at the bottom, while those at the top get whatever they can demand. Even the solons Becker/Posner are committed to assuring that there are no caps on pay for those at the top–even when, as now, those caps are effectively financed by taxpayers:
People like them have enabled a sense of entitlement among those at the top that is, quite frankly, boundless.
Of course, someone like Aaron Feuerstein of the Malden Mills may occasionally offer real sacrifice for his workers:
“[After a fire,] he made a decision – one that others in the textile industry found hard to believe. Feuerstein decided to rebuild right there in Lawrence – not to move down South or overseas as much of the industry had done in search of cheap labor. He also made another shocking decision. For the next 60 days, all employees would be paid their full salaries.”
But I think the culture of greed is so well-entrenched in the professions now that I doubt anyone like Feuerstein will emerge in the US legal sector.
In comment above, I meant “when this compensation” rather then “when these caps”.