Think a recent graduate from a top 10 law school is less likely to be laid off from a big firm than the less-prestigious associate down the hall? Think again.
A new study by Paul Oyer, a business professor at Stanford University, and Scott Schaefer, a business professor at the University of Utah who was not on the panel, found that the opposite was true, though that trend flipped after lawyers built up a few more years of seniority. Oyer also said younger lawyers were far more likely to be laid off than older lawyers. Oyer presented the results of his study at a panel moderated by The American Lawyer’s editor in chief, Aric Press, at the “Law Firm Evolution: Brave New World or Business as Usual?” conference.
Peter Zeughauser, who owns The Zeughauser Group, said during today’s panel discussion that Oyer’s data might reflect a “sense of entitlement” among graduates from prestigious schools that only join a large law firm to pay off loans. “They may have no intention of pursuing a Big Law career and aren’t that productive while at the firm, which would make them more likely to be laid off,” Zeughauser said.
Oyer also found that what he dubbed “school-based networks” came into play when associates were laid off. Oyer said that meant if there wasn’t a partner in the office who went to the same school as an associate, that associate was more likely to be laid off.
For his study, Oyer routinely examined the Web pages of about 300 large law firms. To find which lawyers may have been laid off, Oyer compared snapshots of firm Web pages before and after announced layoffs. He attributed other departures to lawyers leaving voluntarily. Oyer acknowledged that the data aren't perfect, but said he was able to make some interesting assessments about law firm departures.
Patricia Gillette, an employment partner at Orrick, Herrington & Sutcliffe who was a member of the panel, said that layoffs should be avoided if at all possible because they permanently change the culture of a firm. “It takes a long time to build up that level of trust again after a layoff,” Gillette said. She added that law firms should focus instead on alternatives such as hiring fewer associates in general, not giving offers to as many summer associates, or switching to a merit-based compensation system.
The panel also touched on a study by Sida Liu, a sociology and law professor at the University of Wisconsin-Madison, examining the Chinese legal industry and the challenges facing U.S. and European firms looking to enter the market there.
Liu said that in the past 30 years, but especially since 2001, when China entered the World Trade Organization, the Chinese legal industry has grown dramatically. Several Chinese firms now boast more than 1,000 lawyers in as many as 16 offices across the country. Meanwhile, the offices launched in China by U.S. and European firms are much smaller, thanks in large part to Chinese regulations that barred them from hiring Chinese lawyers.
When the economic crisis hit in 2008, China’s legal industry was damaged, but many Chinese firms did not have layoffs. Liu attributed that to the expectation that the legal industry would return and firms’ desire to be well positioned to handle that. “They expected that the Chinese market would recover more quickly than other markets. Now, it hasn’t recovered to the same magnitude as it was in 2006 or 2007, but they are moving steadily toward recovery,” Liu said.
Zeughauser said that the real question will be whether U.S. and European law firms will be able to use their growing presence in China to put pressure on Chinese firms to pursue pro bono efforts such as human rights in the highly restrictive country. “The legal profession is the guardian of the rule of law. Will U.S. and U.K. firms be able to instill an ethos of pro bono to protect individual rights?” Zeughauser asked.
Liu responded that Chinese firms will be reluctant to pursue those efforts for fear of crossing the Chinese government. “That’s a very important question. But there will be a lot of difficulties in getting something like that done,” Liu said.
That said, American law firms can take a lesson from Chinese firms, which have instilled a “traditionally Asian approach to managing their lawyers.” Liu said “They want to build harmonious law firms like they want to build a harmonious society, so they don’t lay off their young lawyers. That culture is getting embedded into the cultures of the firms.”