No Easy Answers

After five consecutive years of increasing their ranks–and of regarding layoffs as anathema–Am Law 100 firms abruptly changed course in 2009, blanketing their workforce with pink slips. Facing a deepening global recession, a dramatic decline in demand, and pressure from clients to reduce costs, Am Law 100 firms laid off more than 3,000 lawyers, slashed the size of their incoming associate classes, and pushed start dates back for months. The pain was as widespread as it was deep: Fifty-four Am Law 100 firms reduced their total head count last year, compared to only 22 of those 100 firms in 2008, and eight firms in 2007.

While the scope of the carnage is clear, assessing its financial impact is a far murkier business. Yes, in theory, firms that deeply cut their workforce could have realized gains in revenue per lawyer, profits per partner, or both. But a slew of factors, from the timing of the cuts to strategic differences among firms, adds complexity to what might seem to be a straightforward equation. The upshot: While we can identify firms that both cut their ranks and performed well in 2009 in revenue per lawyer, profits per partner, and value per lawyer (and those that didn’t), it is too early to anoint winners and losers or to make a connection between head count cuts and financial performance.

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