As summer ended, many Biglaw sectors experienced several layoffs, with statements for workforce reductions emerging rapidly. Some law firms made attempts to downsize despite an observed minor increase in demand this year, whereas others chose to postpone the start dates of their incoming associate classes to relieve their total employee count.
Yet, uncertainty about future proceedings lingers among associates and staff regarding possible layoffs. A poll conducted by Law.com revealed that layoffs remain a top concern, and many anticipate further job cuts before the year concludes.
Survey respondents predominately represented large Biglaw firms, with 17% confirming their firms had already carried out layoffs this year, and 76.6% denying any layoffs. Interestingly, of those affirming layoffs, 40% claimed the reason given was that their firms had over-hired during the pandemic and were now over-capacity due to reduced demand.
However, several respondents expressed skepticism about this overcapacity explanation. One poll participant noted, “Firm is saying we have too much headcount, but we all know this is to ensure partner comp remains unaffected”.
Given the hesitation around the overcapacity rationale, respondents believed 2023 could bring further layoffs in the legal sector. A consensus was found among the respondents that layoffs among law firms are not yet done for this year, primarily due to economic factors such as high-interest rates reducing demand.
Reflecting on the tech industry developments, one Law.com participant speculated that, “[if] every firm wants to maintain the profitability or their ranking, the whole industry will need to make layoffs when faced with a slower economy and fewer transactions.”
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All developments point towards more anticipated layoffs within law firms before year-end. Staff and attorneys express caution against ‘overcorrecting,’ but economic turbulence and overcapacity will likely be the driving factors for these job cuts. For more details, refer to the original article.