Layoff or Buyout

Posted on February 10, 2009 by Ed Poll

Hogan & Hartson seeks to do something new. They are offering a buyout to the legal secretaries and word processing staff. Their belief is that voluntary action is better, more humane, and yet reaches the same goal of staff reduction as layoffs does. Under the terms of the buyout, the more senior staff selecting the option will receive more compensation.  The more recently hired staff will receive less; but the minimum employment must be 5 years.

On the one hand, the firm may be losing significant talent. On the other hand, the more senior is the staff person departing, the higher will be the savings for the firm.

This certainly is a new twist on the layoff landscape; but the inescapable conclusion is that very few firms are able to escape the general contraction of our economy. It will take some time to recoup and rebuild our world. In the meantime, law firms must make sure that they do not cut "meat," but rather carefully analyze the economics of their operation and reduce only in those areas where the have too many people for the work they expect to receive in the near future. Teaching folks in the "excess" areas for other areas in the firm would be my first preference, however, before laying off.  I have yet to hear of any firm focusing on enhancing the education of their staff, though there must be some.  "Right sizing" often is merely a euphemism for failing to take the time to run your practice efficiently and effectively.
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Heather Milligan - February 10, 2009 1:32 PM

I was at big law for a round of voluntary staff reductions. These were done in lieu of layoffs. Unfortunately, the people who took the packages were those who were 1) close to retirement, so it just made the decision come quicker; 2) really great at their jobs and saw this as a way to get paid to go out on their own, take a long vacation, or look for another job.

My experience is that the voluntary reductions are rarely enough, and layoffs will occur. However, the firm is at risk of losing good talent in the meantime.

They should reverse the process: first clear the dead weight through layoffs, then allow voluntary reductions if necessary.

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