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January/February 2009 Issue | Volume 35 Number 1 | Page 60
BUSINESS

Managing

The Human Side of Layoffs: Carrying Out the Hard Decision

Guidance on the painful choice of letting people go, what procedures to follow, and how to communicate your decisions after the fact.

The economic crisis is affecting employers across the globe, and law firms are not immune. We’ve already seen the fall of some firms with long histories. And experts tell us not to expect any real recovery in the short term. The stark news means that many must look hard at cutting costs—including headcounts.

The harsh realities of a recession are forcing law firm leaders to make tough decisions about how to keep their firms financially secure. And unfortunately, in some cases, painful measures will be needed to keep the firm afloat. For some firms, layoffs of legal and nonlegal personnel may be a necessary step. Deciding to let people go is never a decision to be made lightly. But once the decision becomes a necessity, how should law firm managers proceed?

Here is some guidance that focuses on the human side of carrying out a reduction in your workforce.

Choose with an Eye Toward the Future

The first part of the process is deciding who will be let go. The way to answer this question is by looking at your firm’s vision for the future, in the form of its business plan. You do not want to view an individual’s layoff as simply a cost-cutting measure. Rather, it should be a strategic decision that enables the firm to face the future in a positive direction.

While often layoffs are made in a crisis situation, managers must take the time to really think through the ramifications of the decision in terms of how the firm intends to move forward. Are there certain practice areas that aren’t profitable and aren’t likely to be so in the future? Are there places where the firm no longer wants to focus its resources? Have you implemented technologies that reduce the need for particular types of support staff? Are there practices that are worth continuing but have just too great a headcount for the amount of foreseeable business? Are there individuals who no longer fit with the firm’s mission?

By looking through the lens of the business plan, you can make the proper choices about reducing staff. Importantly, you are also able to explain that this strategy is not about saving a sinking ship, but rather is one that shores up the firm to move steadfastly forward.

Prepare a Checklist for the Process

Remember that your employees, regardless of their tenure with the firm, have likely contributed to the firm’s success at some point. You owe it to them, and to the firm, to plan out your next steps carefully. The firm should provide whatever resources possible to make a difficult situation a little less painful and to help ensure that employees land well somewhere else. Therefore, in advance of notifying individuals that they are being let go, the firm needs to address the following:

  • Will there be a transition period during which employees will remain at work to put their client matters in order?
  • What severance pay will the firm provide?
  • What about health and other benefits during the transition period?
  • In terms of partners who are affected, what kind of early retirement package could be offered?
  • How will references be handled?
  • Will you provide transition support such as secretarial assistance and outplacement counseling for job searches?
  • How will the timing of the layoffs be handled? A phaseout, or slowly letting individuals go one by one, can do tremendous damage to morale and the firm’s reputation. Whenever possible, it is best that all individuals are laid off at the same time.
  • Who will meet with each individual to explain the layoff? And do those who will be delivering the message have an outline of what to say? This is a very emotional time for everyone. To ensure that layoff meetings are handled consistently and with dignity, the firm needs to prepare an outline so that its message and layoff policies are delivered clearly.

It is also essential to prepare a memorandum that explains severance, benefits, support services, references and the like for those who are being let go. Make certain the information is provided in a format that can be read later. The memo should be given to the affected employees during their termination meeting. There may be other documents, such as release forms and information on outplacement services, to be given during the meeting as well.

Individual meetings should be held in a conference room out of the public eye or in the office of the individual being given the message. Those delivering the message should know that there’s likely to be emotion—anger, fear, sadness, even crying are normal reactions to such news. While it may be tempting to rush through such a meeting, it is very important to give the person enough time to process the information, ask questions and voice reactions. Individuals should be treated with respect and given positive feedback about how the firm values their contributions.

After the Meetings

Following the individual meetings, it’s critical to communicate with the rest of the firm about the layoffs. Since fear is typically the number one reaction to such news, the firm’s leaders have to address the issue carefully and reassure everyone left that the layoffs are behind them. This is where it is very important to talk about the vision for the firm’s future, why it’s essential to remain focused on the business plan, and how all remaining employees will play a part in the firm moving forward. Replace rumor with real information. Communication is key to making sure that those who remain feel secure in their positions and stay calm and committed to the firm.

In your communications beyond the firm’s walls, be sure to convey news of the layoffs in a way that enables those leaving to be in the best possible position. State in any press release that these are talented individuals whom the firm regrets having to let go. If you allow others to think these are performance-related layoffs when they’re not, it hurts those who are looking for new jobs—but it also affects the firm’s reputation and creates mistrust in those still with the firm.

It’s also important that those who’ve been let go aren’t simply ignored after the termination meetings. In an attempt to avoid potential conflicts, many individuals stop communicating with colleagues who have been laid off. As a manager, you should encourage employees to support those in transition as much as possible. As for your own role, you should check on how the individuals’ job searches are progressing, ask how you can help, and follow through with any promises you have made, such as making contacts with potential employers. How you treat these individuals not only has an impact on how they will view the firm in future, but your present employees are noting these things as well.

Take Care to Make the Best of It

Deciding to let employees go is never easy—and neither is the follow-through process. But management must remember that these are individuals who have contributed to the firm and established relationships with those around them. While the bottom line in any firm matters, the human element must be of highest priority in a layoff. Handling each step of the process with great care and sensitivity should allow all involved to land well and keep the firm’s reputation on a sound footing.

About the Author

Marcia Pennington Shannon is a principal in theWashington, DC, attorney management consulting firm Shannon & Manch, LLP. She is coauthor of Recruiting Lawyers: How to Hire the Best Talent ( ABA, 2000).

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