McCullough Discusses Downsizing Law Firms in Law360 Article

Don't miss this article by Aebra Coe on Law360. Society 54's Heather McCullough was consulted and quoted in her article, "How To Downsize a Law Firm Without the Drama."

When law firms cut attorneys in an effort to carefully and strategically reduce expenses, the talent that's left behind can sometimes react by heading for the door.

The hemorrhaging of good attorneys after a strategic layoff can be mitigated though, according to Heather McCullough of legal services consulting firm Society54. Transparency about why the decision has been made, along with a good deal of support for the attorneys leaving and those staying, goes a long way toward keeping the peace, she said.

“The minute doors close and conversations are had behind closed doors, rumors start, and people begin to worry,” McCullough said. “If staff or attorneys become disgruntled, they either lash out or they decide to leave. The more you are able to share, the more comfort you can give to people who remain.”

Here are three ways firms can quickly cauterize the bleeding after a layoff and downsize without the drama.

Be Open About It

When leaders are less than forthright with the attorneys who are left behind after a layoff, the resultant confusion can lead to inaccurate perceptions about the situation, which is often perceived as more dire than reality, McCullough said.

Everyone has their own theory about what’s going on, which include things like “a second wave of layoffs are coming” or “nobody will make partner this year,” even when they're not true.

“You start to get the knee-jerk reactions when people don't understand or aren’t communicated with because they fear that they’re next,” she said.

Frequently, layoffs are the result of a strategic decision to reduce the number of attorneys in a given practice area or region and isn’t a sign a firm is failing financially, according to Gloria Sandrino, a principal at Lateral Link. That means, rather than allowing attorneys to fear the worst, firm leaders should sit them down and make sure they understand the strategic nature of the cuts.

“I would say that when it works the best is when a firm is very transparent about the reasons for the layoffs,” Sandrino said. “They should explain what’s working and not working, what layoffs they’ll have to have, and explain why they’re doing what they’re doing. That goes a long way.”

For instance, if management is downsizing in one area in order to build up a budding new practice area that holds the promise for growth, they should let the rest of the firm know that.

“Make sure past, current and future attorneys understand the strategy behind a move like this,” Sandrino said. “Ripple effects are really minimized if there’s a strategy.”

Help Those Leaving

According to Sandrino, one of the smoothest instances of downsizing she’s seen was when Debevoise & Plimpton LLP eliminated its entire trusts and estates group. The key to the successful transition, she said, was that the firm gave the affected attorneys plenty of time to look for a new position and enlisted recruiters to help the process along.

“That whole group is intact at Loeb & Loeb LLP, and they’re very happy there,” she said. “It’s sort of like a win-win.”

Offering help to those who are leaving pays dividends, Sandrino said, because if attorneys who are let go are left without a job, they will likely harbor feelings of resentment, which could come out in the press or to clients. Additionally, attorneys who are left behind could see the way their colleagues were seemingly jilted and react negatively as well.

That’s why it is essential to offer to connect departing attorneys with helpful resources, as well as give them enough notice that they have time to find a new position and do not have to worry about missing a mortgage payment, according to Sandrino. She advised giving them three to six months' notice — never 30 days.

In instances where firms are forced to let go promising associates, they can try to place them in-house with clients, according to Kenneth Young of Young Mayden LLC. Or the firm can call a recruiter to see if there are openings elsewhere and offer a glowing reference.

“That is a win-win for both, and the associate is forever appreciative to the firm,” he said. “There’s no unnecessary drama, no news story, and everyone is happy."

Comfort Those Staying

Following a layoff, management needs to address as many questions as possible from the remaining employees, preferably in an open environment where everyone can hear one another’s questions and management’s answers at the same time, McCullough said. At larger firms, that could mean video conferences or phone conferences.

It is also important to include employees in strategic planning and seek feedback when deciding how to distribute jobs previously handled by those laid off, allowing those left behind the opportunity to take on more responsibility, according to McCullough.

Providing comfort to attorneys who are left behind can also mean showing them that firm leadership is striving to bring new business in so that those remaining don’t have to worry about having enough of work to go around, Young said.

Another way firms can offer an olive branch to attorneys after a layoff, when lead partners are affected, is to replace departed mentors as soon as possible, according to Sandrino.

“One of the things that is very helpful, so you don’t have all the young partners headed out the door, is to have new mentors for them at the firm,” she explained.

When the co-leaders of Reed Smith LLP's financial services group left the firm in March, Sandrino quickly began to receive calls from younger partners saying they were dissatisfied because of the resultant lack of leadership, she recalled.

“Younger partners are knocking on the door of recruiters because now that their leaders are gone, the firm has done nothing to fly somebody in to calm the waters and let everyone know it’ll be okay,” she said.

View the article on Law360 here.