The reality for law firms is that layoffs, of both staff and lawyers, can become a necessity.  Many law firms facing transition arrive at the layoff decision early and for those firms the decision to part ways with certain personnel may represent an adjustment or fine-tuning. Other firms only resort to layoffs much later in the transition continuum, generally after performance has lagged for too long without action. Whether fine-tuning or something more dramatic, a layoff can be a significant event in the life of any law firm.

In theory, pulling the layoff trigger early is a no brainer. From a practical standpoint, however, the concern about potential fall out from the layoff decision causes many law firm managers to pause before cutting people loose.

A firm deciding to lay off personnel is in control of the decision, the timing of the decision, the message that goes with the decision, and the steps to address any initial fall out.  Weil Gotschal and Patton Boggs recently laid off staff and lawyers and both firms appear to have given their decisions considerable thought before taking their action. Both firms have recently found, however, that while they controlled the layoff decision, they are not in control of the aftershocks.

Layoffs often are followed by more departures, ones that are not orchestrated by the firm. These aftershocks are however, a natural extension of the layoff decision. Consequently, upon initiating the personnel action, law firms need to be prepared for additional unplanned departures from:

Attorneys that just missed being laid off. In any layoff, a number of lawyers just avoided being among those that were let go. Most attorneys are perceptive enough to know which of them avoided a visit from the grim reaper. Many fear a next round of layoffs and seek a soft landing spot while their message to prospective employers is within their control. Even though such voluntary departures may be good from the standpoint of the law firm’s metrics, the departures can create more unease among valuable lawyers that remain.

Attorneys lose confidence in management and/or the firm’s direction. Other attorneys, including some of a firm’s most productive performers, were happy or at least satisfied because the firm was performing well and appeared headed in the right direction. Layoffs can change their outlook and create doubt about the future. These lawyers, ones that really deliver value to the firm, are hard to lose but many of them depart.

Attorneys dependent on annual raises either don’t deserve them and resources are too strained for social promotions. “A rising tide floats all boats” works well when the firm is ascending. But layoffs usually are symbolic of a financially impacted firm. When the tide rolls out, however, getting money to partners whose past performance was inadequate but who were carried along won’t work. Attorneys “socially promoted” in the past may leave the firm before their compensation goes down, hoping to parlay an ascending compensation history into a good deal elsewhere.

Attorneys fear that a “break out year” will not be recognized. Pity the attorney who experiences a monster year at the very time the firm is motivated to lay off lawyers in order to right the financial ship. During this exceptional year, the anticipation of a huge raise has danced in his or her head, yet the layoffs create concern that the monster performance will not or cannot be recognized in the next compensation setting. Attorneys fitting this profile may feel compelled to leave as a matter of financial justice.

Generally solid soldiers are vulnerable to outside overtures. Even the “most loyal” of partners at a firm can have their heads turned, especially when the firm is trying to recover from the circumstances that caused the layoffs. Every loyalist can be spirited away and the pitch from the suitor is made just a little easier under the pall of the layoffs.

Layoffs are painful and can result in a lingering psychological impact on the survivors. Therefore, it is vital that whenever a layoff is conducted, the aftershocks be anticipated and preparations made for dealing with them.  Management should realize that communication with the firm regarding the layoffs does not end once the former attorneys and staff have departed.  The post layoff communications should not be a monologue, but should involve a give and take that solicits everyone’s perspectives.  The message should not only demonstrate confidence in the future direction of the firm, but it also should show a compassion for the people that were laid off as well as those that remain.  Communication that is direct and responsive can reduce uncertainty and keep you informed.  It will go a long way towards minimizing the effects of aftershock.

What other aftershocks have you experienced?  How do you minimize that risk?