Last week I suggested that the potent stigma preventing layoffs at top-shelf firms was melting away. Thinking about the Latham & Watkins layoffs, I wrote:
Latham is so large and reputable, and these layoffs so public, that a good number of big, fancy firms will now find they have cover - that they won't suffer significant comparative reputatiton damage - if they lay off. This doesn't mean that Cravath or Wilmer will lay off associates...but don't be stunned if a Paul, Weiss or Skadden, Arps does.
A commentor responded:
If you think there's a fundamental difference between Cravath and Wilmer on the one hand and Skadden and Paul Weiss on the other, you're wrong. If anything, the latter two are in a better position. Cravath's business model is concentrated on the big banks of New York and London. They took a 24% PPP hit last year and have a new very pricey lease kicking in in 2009.
But the commentor and I agreed on one thing: once Cravath does a public layoff, the stigma around layoffs is fully gone.
Well it hasn't happened yet, but Cravath is cutting back another way: ATL reports that it has shortened its summer from 12 to 10 weeks. The decision may make economic sense - they're saving something like $7000 per summer associate, I'm guessing, and this move may save them several hundred grand - but it also places them in the company of regular old "big firms". To be sure, they're not alone. Kirkland, Gibson Dunn and Shearman & Sterling appear to be doing the same. So we can reach the following conclusions:
1. All stigma around shortening summers is gone.
2. Any time now, all stigma around layoffs may be gone.
Here's the real question. Is Cravath, the firm that pioneered radical raises with its $12,000 hike back in the 1980's, ready to pioneer pay cuts? I suspect that a lot of grateful law firms would quickly follow.