“Never let a crisis go to waste,” was a common refrain among legal industry observers last year. While many firms have found themselves busy with legal work amid the pandemic, several have acknowledged significant layoffs, driven by outsourcing and other changes in the basis of the law firm’s business model.
As the crisis dissipates, companies will likely continue to capitalize on these lessons learned and eliminate some employee roles.
“The long-term trend is that technology is replacing people. … This trend has been accelerated by the fact that so many lawyers have learned to do self-service, ”said Hugh Simons, consultant and law firm researcher. The acceleration came when law firms put some people on leave who had no work to return to.
“People get by without a paralegal or what we used to call secretaries on their doorstep. They don’t need them as much, and they don’t need receptionists as much, ”said Mary K Young of the Zeughauser Group.
Many of these positions represented “hidden waste” for businesses and have already been “quietly abandoned,” said Joe Altonji, founding director of LawVision Group. However, he noted, law firms that accepted Paycheck Protection Program loans may have retained people in those positions to meet loan cancellation requirements and could choose to remove. posts later.
Law firms will continue to monitor the workforce, said Tom Clay, of Altman Weil.
Last year, “it became very clear that the number of support staff required to support lawyers just didn’t need some of these people,” Clay noted. “There will be a decrease in the number of support staff over the next two years, which could be quite significant in terms of results. “
Clay said law firms will institute requirements for certain technological skills among their staff. Those who do not meet these requirements may reach a cap on salary increases. Or they may be offered a retirement bonus. Businesses are likely to do it “quietly,” he said.
Young agreed that companies will seek buyouts and encourage retirements when they can.
On the lawyer side, it seems that reductions at associate level are unlikely.
“I haven’t seen any indication of firms reducing their partners,” said Summer Eberhard, managing director of the associate practice group at Major, Lindsey & Africa. “[Firms aren’t] let anyone go, whether they are the best associate or doing a mediocre job. Companies try to keep as many people as possible. “
“Some companies may go back to their size from last year and say, ‘We shouldn’t have done this,’” Eberhard added.
Young said many firms were reluctant to reduce the ranks of attorneys for capacity reasons in 2020 because they were burned in 2008 when cuts limited their ability to manage return to work.
But Simons said underperforming lawyers will be moved this year, especially at the partner level. He said companies need to at least make room for new talent. These performance-related decisions, however, have a longer time frame.
This type of advice was slated for 2020, and although it did take place, many law firms continued to see their unfair rank rise. Regarding the board and downsizing, Young said, “We’re always going to see it.” Despite the lessons learned in 2020, the level of urgency is not as high as some expected at the same time a year ago.
“It’s not like 2008 and 2009. It’s not ‘I have to slash'” because of the poor economic conditions in the legal industry, Young said. Instead, “it’s” I’m going to use this time to adjust the mix, and I’m going to use this time to advise some people who are just not suitable. “”
Yet, she noted, in many companies “there’s a lot of reluctance to do any of these things, because it’s a people business.”
Another possibility, Altonji said, is that companies find a way to staff certain roles outside of traditional locations. For example, he said, “your assistant no longer needs to be sitting in front of your door.”
These changes remain to be determined, as partners and business leaders return to the office and find out what the new normal brings.
Justin Henry and Dylan Jackson contributed to this report.