Much Ado About Nothing? ; Midsize Firm Report ; Mental Health Deep Dive
Much Ado About Nothing?
Although rumors of layoffs are circulating nationally, an analysis of reporting reveals that these repeated references are more smoke than fire. Cooley has reportedly instituted a hiring freeze; and Reed Smith has reportedly parted ways with a number of senior lawyers without substantial books of business (Hiring Pauses, Stealth Layoffs at Top 50 Law Firms Signal Industry Austerity, Justin Henry, 9/8/22, American Lawyer). Additionally, Fish & Richardson eliminated its litigation secretary role, affecting at least 9 employees (Staff Layoffs at Fish & Richardson as Secretary Roles 'Transition', Justin Henry, 9/19/22, American Lawyer). These limited moves by 3 firms do not add up to a widespread phenomenon.
Even if the economy worsens, firms are unlikely to layoff attorneys in significant numbers, with the difficulties of staffing /recruiting fresh in mind from the recent Talent Wars and the lessons of over-cutting during the Great Recession solidified in long-term memory.
Yet the mere prospect of layoffs and a drop in hours may shift leverage in return to office policies back to law firms (Lagging Demand and Layoff Fears Give Firms Leverage over Talent – Will They Use it?, Dan Roe and Varsha Partel, 9/20/22, American Lawyer).
Midsize Firm Report
Midsize firms may be in a good position to weather the economy in the short term, according to a report by Thomson Reuters, analyzing data from 168 U.S. based law firms, including 45 Am Law 100 firms, 50 Am Law Second Hundred firms, and 73 additional midsize firms (2022 Report on the State of the Midsize Legal Market, Thomson Reuters Institute, 9/22/22). Thomson Reuters found that both Midsize and Second Hundred firms saw an increase in demand (billable hours) in the first half of the year, 1.7% and 1.8% respectively; conversely, the AmLaw 100 saw a -.2% decline. For Midsize firms, substantial demand growth in real estate (6.5%) and moderate growth in litigation (typically the largest practice area by headcount) helped to offset substantial decline in M&A demand (-10.2%.).
Prior to the first half of 2022, 2015 was the most recent year in which Midsize firms outperformed the AmLaw 100 and Second Hundred in demand growth. Thomson Reuters theorizes that starting in 2016 clients sought “safe harbors” and the pandemic only exacerbated that trend; but now that the pandemic is waning and inflation is causing General Counsels to take a closer look at rates, Midsize firms may be well positioned to capture more work (Midsize Law Firms See Positive Results Amid Challenges, New Report Finds, Thomson Reuters Institute, 9/22/22).
Midsize firms have trailed Am Law counterparts in worked rate growth each year over the last decade. And while this may prove fruitful in attracting new business from cost-conscious GCs, limited rate growth may be offset by rising inflation; in Q2 2022, inflation exceeded the worked rate growth of Midsize firms (4.7% as measured by core Personal Consumer Expenditure index) (Midsize Report).
Mental Health Deep Dive
A recent Law.com Pro Executive Briefing analyzed ALM Intelligence’s 2022 Mental Health Survey by timekeeper category (A Roadmap for Identifying and Addressing Mental Health Needs by Role in Your Firm, Gina Passarella and Patrick Fuller, 9/26/22, Law.com). Among the 3,400 survey respondents, anxiety was the most identified mental health challenge across roles, but depression and substance abuse appear to be significant challenges as well.
Respondents reported an inability to take extended leave to deal with mental health challenges or to fully utilize vacations to unplug and prevent burnout. Nonequity partners were the least likely to take vacation, due to client demands and the inability to disconnect; 17% of nonequity partners reported not using any of their vacation time. Equity partners were more likely to use their vacation time, but 83.2% reported an inability to disconnect when doing so.
