Stop Making Sense: Hire! Fire! Hire Again!
Vivia Chen
August 19, 2010

Some people find silver linings in life's misfortunes. Me--I tend to find dark linings even when the news seems bright and cheery.

Recently, there's been a flow of upbeat stories about how firms are giving out offers to 100 percent of their summer associates, faster than yesterday's baked goods. Among the 100 percent club so far, reports Above the Law: Latham & Watkins (110 offers!); Ropes & Gray (82 offers); Kirkland & Ellis's Chicago office (32 offers); Shearman & Sterling (27 offers); and Skadden Arps's Washington, D.C., office (11 offers).

What's more, firms are announcing that they'll be increasing their summer associate classes for 2011: Cleary Gottlieb; Milbank Tweed; Weil Gotshal; Cravath; and Skadden Arps are some of the firms on this list, according to The Am Law Daily.

All terrific news, so why am I not feeling the good vibes? Simple: Some of those same firms that are now so bullish on new hires made some nasty layoffs not that long ago. Latham & Watkins cut close to 200 lawyers, White & Case almost 300, and Milbank Tweed about 50--to name just a few that stand out.

Call it intuition, but I'm betting that few of those laid-off lawyers are being invited back. I checked with some headhunters recently, and they confirmed what we all know: Laid-off associates are still struggling, even though there are signs of life in the lateral associate market.

"There are firms that laid off associates that are getting back in the market," says Palo Alto recruiter Avis Caravello. "There are jobs in the midlevel." She adds that firms complain that  junior associates  "lack experience" and that senior ones are "too expensive." As for laid-off associates, big firms generally aren't even taking a look: "There are candidates with great credentials, but there are too many out there."

It's basically the same situation on the East Coast. Some laid-off lawyers are "Harvard across the board," says New York recruiter Bonnie Miller. And "they are doing contract work, or whatever they can. It's awful." Adds New York recruiter Katherine Frink-Hamlett: "Prospects are good for currently employed laterals," but deferred and laid-off associates face "market difficulties."

Let's see now--firms need bodies, and laid-off lawyers need jobs. That should be an easy match, right? Which brings up this obvious question: Why won't firms hire back some of their own laid-off talent? Wouldn't that be easier than investing the time, money, and energy in wooing a whole new crop of baby associates?

That might be logical, except "law firms hire by class year," and hiring back associates is considered too expensive, says Miller. But wouldn't some of those laid-off associates be willing to step back their class year in return for a decent job? Probably, says Miller, but she says she doubts that firms would ever show that kind of flexibility: "They don't look at the big picture."

Everyone knows that associates are fungible, but this whole pattern of hiring/firing/hiring seems ridiculously wasteful--in both human and organizational terms. Maybe firms just want shiny new toys and think nothing of spending big bucks to play with them. If firms are tightening their belts, why are they being so rigid, short-sighted, and wasteful about their talent pool?

Of course, I'm not at all savvy about the mysteries of law firm management. I'm sure there's a brilliant business strategy behind all this. Won't someone explain this to me?