Redundancies hit City firms

City law firms have been announcing major redundancy rounds: Shoosmiths has confirmed that 93 of its staff are at risk of redundancy, just a couple of days after Herbert Smith announced that it was looking at making 51 staff redundant.

Insiders at Herbies say that problems have been building up as lawyers hung on to their jobs, despite receiving poor appraisals (as is often the case when tough market conditions mean there are few jobs to move to). The resulting low rates of attrition mean that while there's a reasonable amount of work around, there are just too many senior associates to service it. So on Monday Herbies announced that 23 corporate lawyers, 5 real estate lawyers and 19 secretaries were for the chop.

At least the firm acknowledged that "it has been a difficult decision which we have taken reluctantly and after much deliberation". However there was no such contrition at Shoosmiths, where 93 staff in the firm's consumer legal services arm (largely its volume motor personal injury team in Basingstoke) are at risk.

Shoosmiths issued a statement after being contacted by RollOnFriday yesterday, which expressed no regret at all at doing over nearly 100 employees. But, on the plus side, there was plenty of management speak about what a great move the redundancies are, and how the firm is now doing jolly well: "The desired re-balancing has now been achieved. We have well established relationships with referrers who value exceptional service quality, and we have an innovative direct-to-consumer channel". Presumably its trainees are delighted as well.

Some shoesmiths being made redundant yesterday

Apparently the decision was taken to allow the firm to focus on "legal disciplines that align more closely with its business brand". In other words, to hang the staff out to dry, and try to make more money out of higher end work. Nice.

Big law firms are not exactly class-leading when it comes to planning their staff numbers, and managing partners throughout the City have been telling RollOnFriday that they are all in much the same boat. Now that large firms are starting to break ranks, expect others to follow.

BREAKING NEWS: Mayer Brown has just confirmed that up to 20 jobs are at risk of redundancy in its London office.

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Comments

"problems have been building up as lawyers hung on to their jobs, despite receiving poor appraisals" = "regrets having to make redundancy payments as lawyers have refused to be managed out"

Appraisals when a firm is contemplating redundancies are a subjective joke that for some reason employment lawyers still construe as an objective criterion. You might as well include "versatility" or "anticipated future contribution" or some other bull.

Note to HS and others - if you're pulling this kind of stunt, make sure you pay more than statutory.

For the avoidance of doubt, I do not work at HS.

Intrigued to see that HS got off lightly in the first half of the report rather than being put to the sword in the usual RoF fashion, as Shoosmiths were in the second half of the report, I then noticed the sponsors on the right-hand side of the page and couldn't but wonder whether this influenced the tone. I've often wondered how RoF approaches these potential conflits of interest and would welcome their comments. OK you've said that Shoosmiths didn't express regret whereas HS did, but for there to be no cutting comments at all about HS is most unusual.

Not trying to be smart, just genuinely intrigued.

Hi.

Thanks for the comment.

A quick flick through recent editions of RoF will show that we're quite happy to give any firm a kicking if they get things wrong. Most of the major firms recruit through us, including the entire Magic Circle. We'd never have any news if we took a soft line on them.

Firms accept this, and understand that what they do gets reported. As long as we contact them about it and are balanced they're generally pretty happy.

In this case, whilst the Herbies news is obviously bad I think it was handled well by the firm and was possibly inevitable. The firm will be the same size that it was a year ago, managing attrition in this market is an issue for all firms and others will follow. As long as they're generous with their redundancy packages then fair enough.

Shoosmiths tried to keep what was a much larger redundancy programme quiet. They seem to be dumping an entire department rather than just managing numbers, and their attempted justification was dreadful.

Hope that makes sense.

Matthew

Anon at 12:00 is right. I too wonder how RoF finds that fine balance of sticking to its straightforward honest style and not upsetting the big money spenders.

RoF, any input?

Two to three years ago, an email went around Shoosmiths saying how bad things were and asking staff whether they would be prepared to take a pay cut to help out the "firm". Whilst no direct threat was made to staff about the consequences of a refusal, it was pretty clear from reading between the lines that this wouldn't go down well. In exchange for taking a cut, the firm, in fairness, granted fee earners two additional days' to their annual leave allowance. The members of at least one team (commercial property) took an additional 10% pay cut to stave off the threat of a redundancy within the team.

Two things then happened:

1. Redundancies took place anyway;

2. On leaving the firm (voluntarily, outside of a redundancy situation), fee earners who had taken the cut were told the two additional days leave would not be taken into account for the purpose of calculating pro rata holiday allowance and if this leave had already been taken, fee earners had to re-pay that amount. Double recovery or what?

I left the firm of my own accord not long after the redundancies, partly because I was unhappy with the culture that had developed within the firm following the departure of its CEO in the wake of the "TraineeGate" affair and the redundancies. I was stung by the annual leave calculation, which seemed a bit rich considering I had already "paid" for this leave, in kind.

Shoddy behaviour. Greedy management. Best avoided?

I think the HS coverage is probably fair. They got burned badly by being too trigger happy in getting rid of lawyers, particularly at the junior-mid range in the early 90s recession and had to recruit at great expense at that level when things picked up. So they've had a resistance to making fee earner redundancies since then and most of the top end partners of influence now were at the firm at that time. I'm fairly sure they have made few if any redundancies over the past 4 years even while their competitors were busily shedding people. From my time there 2000-2004 my recollection is that they didn't really manage a lot of people out (even when we tried to encourage my secretary to leave we put together a performance plan with an hr guy who liked to call himself 'the smiling assassin' which she was actually able to comply with and is indeed still at the firm now).