Rumors of layoffs are commonplace in the legal tech industry, and this is no exception. With the talk of an economic downturn and a recession looming, many have warned of what might come alongside actual tech layoffs. This has caused some to worry about large fundraising rounds for the coming year, as companies may need to tighten their belts.
People may take to updating their LinkedIn profiles and connecting with others for networking opportunities, as well as clients asking questions about a company’s ability to fulfill their needs. If these rumors spread far enough, investors may worry about the individual companies and the industry.
Leading up to Legalweek, there are sure to be many announcements and press releases, which will likely add fuel to the fire. It can be challenging to discern what might be true or false, as truth can often be obscured when presented to the public. The rumor mill is sure to be in full force until then.
Cooley recently laid off 150 employees, including most associates, counsel, and staff. They offered three months of severance pay to associates and one month for staff. Corporate associates in Palo Alto and San Francisco were particularly affected.
According to industry observers, this highlights the importance of building broad corporate practices and offering a range of expertise. Reports indicate that law firms in New York may follow suit as billable hours decrease and over-hiring is corrected.
Headcount across the industry increased through the third quarter; however, Gunderson Dettmer had to make two rounds of cuts due to a drop in venture capital and emerging company work. Kirkland & Ellis also made cuts to associates, exercising stricter performance review standards due to the current economic environment.
Law firms are managing people through the review process and freezing associate hiring to address weak spots and balance payroll expenses. As a result, “stealth layoffs” remain a possibility. Leaders at Gunderson also confirmed eliminating the litigation secretary position; at least nine employees lost their jobs.
While mass layoffs are unlikely, law firms will continue to take more subtle measures to adjust to slower demand.
REFERENCES:
Sign of the Times: Layoff Rumors Besiege Legal Tech
https://www.law.com/legaltechnews/2023/01/10/sign-of-the-times-layoff-rumors-besiege-legal-tech/
Tracking Associate Cuts and Layoffs: How Some Law Firms Are Managing Excess Capacity
https://www.law.com/americanlawyer/2023/01/12/tracking-associate-cuts-and-layoffs-how-some-law-firms-are-managing-excess-capacity/