Leverage For Lawyers

Posted by Elizabeth Zelinka

The next wave of cuts at Big Law is coming—but those cuts might not come in the form of lawyer layoffs.  Law firms have realized that layoffs can be expensive (in terms of providing three- to six-month severance packages) and so a more subtle tactic has begun—dramatic cuts in compensation.

Here is a typical scenario:  a sliding scale of cuts as deep as 80% for lawyers whose billables are below a certain threshold.  So, take a lawyer who is earning $250,000 but who is sitting inside of a practice group whose work has slowed dramatically.  Perhaps that lawyer has only billed, on average, 50 hours per month since January 1.  In this scenario, that lawyer will receive an 80% pay cut, putting his or her compensation at $50,000—creating a sudden and dramatic reduction in cash flow.  Can most Big Law lawyers turn off their $250,000 lifestyles in the space of two weeks?  Unlikely. 

This is a frightening development.  Lawyers inside of Big Law need to be aware that this situation is happening at a number of firms.  If your billable work has slowed, you must begin to consider how you might manage a severe pay cut, or better yet, begin to create an exit strategy that is viable should you be forced to make the choice to go.  This is especially true in light of the fact that severance might cease to be a significant aspect of Big Law reductions in force.

Elizabeth Zelinka is a Consultant and Career Strategist with Zelinka & Prince Search Partners.  She can be reached through her website at www.zpsearchpartners.com.

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