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11 Int'l Fin. L. Rev. 7 (1992)
Enough Is Enough

handle is hein.journals/intfinr11 and id is 151 raw text is: a            g

Enough is
enough
Bad publicity is forcing law firms to re-think their redundancy
strategies. Richard Hopkins reports on the growing tension in
UK and US legal circles

In the middle of a recession, one
way of cutting costs is to cut people.
But while major companies are used
to cutting hundreds out at a single
stroke of a knife, law firms find the
whole question of sacking people
distasteful, if not a blatant breach of
professional etiquette.
But more and more law firms are
being brought face to face with the
problem. After exponential growth
in the 1980s, firms in the US and UK
have had to face the harsh reality of
too many people and too little work.
Law firms both sides of the Atlantic
are being forced to make lawyers
redundant in a desperate bid to cut
costs. Lawyers who once felt certain
of a gilded future, are now finding
their livelihoods hang in the balance.
'Voluntary lay-offs were the
subtle way of moving out
unwanted lawyers'
However, for many firms, how to
go about laying off lawyers has
proved a nightmare. With voluntary
lay-offs no longer cost effective, and
redundancies too  damaging  to
admit, law firms are beginning to
tread some dangerous ground which
could leave them paying damages for
libel.
In the past, voluntary lay-offs were
the subtle way of moving out
unwanted lawyers. When a lawyer
had passed his or her use-by date, it
was up to the senior partner's office
for a cosy chat about the future and a
gentle hint that it was time to look for
another job. Everyone was relatively
happy. The firm avoided any unwel-
come publicity and the lawyers were
guaranteed a monthly salary until
they could find something else.
Some firms still endeavour to
International Financial Law Review April 1992

adhere to the traditional method.
Last November    London    based
Slaughter and May was said to have
given four female solicitors from
their corporate tax department the
indication that they should start
looking for another job. Adrian
Smart, partner at the firm's London
offices, denies any suggestion that
the four were in effect laid off, but
admits they 'had their long term
propects discussed with them'.
These days, however, the 'volun-
tary' option is no longer so attractive.
The job market is starting to dry up
and many lawyers are taking too long
to find other work. Meanwhile firms,
lumbered with expensive and largely
unwanted lawyers, are showing signs
of strain.
So much so that some firms have
decided tG pull aside the traditional
veil of secrecy and admit they have
been forced to make redundancies.
Yet most lawyers still reel at the
slightest mention of the word redun-
dancy. Tony Kay, partner at Norton
Rose remains emphatic his firm has
not recently laid off a number of
Australian lawyers from its London
operation. 'We have not made a
single redundancy'. Michael Reid,
partner at Titmuss Sainer & Webb,
after denying redundancy allega-
tions, more cryptically adds, 'and of
course I would deny that. We find
redundancy a very ugly word in this
profession'. Skadden Arps Slate
Meagher & Flom vigorously denied
that it had laid off lawyers until
finally submitting to the inevitable.
In a profession where reputation
for quality is everything, the strong
taboo surrounding the issue of
redundancy bodes ill for both the
departing lawyers and the firm
involved. Who wants to employ a
lawyer who has been branded
redundant. For the firms it is
tantamount to admitting financial
difficulties. As one UK lawyer
explains, 'Firms do not want to admit

they have not got enough work. They
want to maintain the image of a busy,
thriving, successful business'. Espe-
cially when all other firms are busy
denying they are doing the same.
Just two medium sized UK firms
have admitted making redundancies
so far this year. Wilde Saptetok the
plunge in January and shed four
solicitors from its corporate depart-
ment. Last month five more received
redundancy payments from London
based Turner Kenneth Brown. But
even  those  were  not publicly
announced. As Philip Brown, man-
aging partner at Wilde Sapte admits,
'We may have come clean but it was
not a bulletin to all and sundry'.
However, he argues, 'Firms ought to
face up to their responsiblities'.
'Some firms have decided to
pull aside the traditional veil
of secrecy'
But law firms, in a desperate bid to
cut costs while avoiding the bad
publicity, are looking for less damag-
ing ways of shedding staff. And the
seemingly simple solution is to fire
lawyers on the grounds of poor
performance: after all, they are not
doing much work, the firm avoids
making any redundancy payments as
well as any nasty rumours that the
firm might be in trouble.
The practice is hardly new. New
York based Cahill Gordon & Rein-
del fired 24 associates back in 1990
on similar grounds. The activity
reached such epidemic proportions
in the US that Bar Associations
across the country were forced to
issue dismissal guidelines in an effort
to stamp out the practice.
It is highly unlikely that the level of
lay-offs in the US would ever reach
the same proportions as the US. But
firms that see sacking lawyers for
poor performance as the painless
way to cut costs should be warned
that the mood among the younger
generation is changing.
The days when firms could rest
assured that aggrieved employees
would never drag them into court for
fear of reprisals have gone for ever.
Nowadays lawyers are a very diffe-

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