The Dreaded Stealth Layoff Rears Its Ugly Head

It’s pretty clear the economic impact of the COVID-19 global pandemic is pretty bad. Biglaw’s been reeling — instituting salary cuts, reductions in partner draws, furloughs, and even layoffs to maintain their cash flow to weather the coronavirus storm. But beyond the prudent financial decisions most in Biglaw are willing to admit to, there are whispers and rumors that more is going on.

That’s right, it looks like stealth layoffs are coming back to Biglaw. Made popular during the 2009 recession, firms often feel it is a way to save face and cut costs at the same time. But while what we’re hearing is still in the rumor stage, Above the Law thought it best to give everyone a refresher on the insidious nature of stealth layoffs to help you spot it when it happens at your firm.

What are stealth layoffs:

Due to their, well, stealthy nature, they’re a little hard to define. But basically it’s when a firm wants to cut headcount but doesn’t want blowback from announcing actual layoffs. So, they’ll give the associates X number of months/weeks to find a new job and the firm may even couch the reductions in performance review terms, making those let go doubt their lawyering skills.

When are they used:

Well, pretty much all the time. But they’re the most prevalent during economic downturns. Rather than signal some perceived weakness, a firm tries to cut overhead without making a splash.

Why are they awful:

It’s not us, it’s you. That’s the message of the stealth layoff. Often the attorneys who find themselves suddenly out of work have not previously had a negative performance review. Despite that history, the firm decided they were the chaff that needed to be cut, never mind that in robust economic times they’d continue to receive good performance reviews.

Are firms using stealth layoffs now:

If the ATL tips line is anything to go by, hell yes. Some firms, in assuring associates that purely economic layoffs were not forthcoming, seemed to signal that headcount reductions in guise of performance review were on the table.

But the challenge is confirming exactly where they’re happening. The firm’s go to media response is that there are no economic-based layoffs (because they believe the line that they’re only letting go of associates because of performance issues). And by refusing to acknowledge to the fired attorneys that economics beyond their control are fueling the employment decision, they’re creating a sense of shame the firms depend on to keep news of their stealth layoffs from circulating. No one wants to tell the world they were fired for being a crappy attorney and that’s what firms are depending on when they feed that fiction.

So, please keep Above the Law in mind when attorneys are suddenly let go and the firm insists there’ve been no layoffs. You can email us or text us (646-820-8477). Even if we are unable to verify the move, we are listening.

If you’d like to sign up for ATL’s Layoff Alerts, please scroll down and enter your email address in the box below this post. If you previously signed up for the layoff alerts, you don’t need to do anything. You’ll receive an email notification within minutes of each layoff, salary cut, or furlough announcement that we publish.

headshotKathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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