Firms prescribe fresh approach to healing open wounds

As hard times strike, the city rethinks its stance on redundancies, reports Scott Neilson

Earlier this month, City law firm Denton Wilde Sapte announced the redundancy of 70 fee-earners and support staff (See [2003] Gazette, 9 May, 4).

The news was hardly a shock to a profession that has seen round after round of redundancies among City practices over the last year - and which saw wave after wave of lay-offs during the recession of the early 1990s.

So have City firms changed their approach to redundancy since the last downturn?

Gill Jones, a partner with London-based recruitment consultancy Taylor Root, says she has seen a more sophisticated approach to overstaffing from firms this time around.

'Firstly, law firms are carrying their losses a lot longer than they did in the 1990s.

They are now much more reticent about laying people off, because of the subsequent gaps in their ranks,' she says.

'And this time around it's been a much slower, surgical and strategic weeding out process.

One tactic firms are trying is to get rid of the non-performers, rather than just laying off a whole tranche of fee-earners.

Before, you'd see whole levels of qualification go.

Now they are keeping on 60% or 70% of their trainees, and spreading the redundancies through the ranks a lot more.

Their approach is more cautious and sensible this time.'

And rightly so, says Giles Rubens, a London-based director with law firm consultancy Hildebrandt International.

'Laying off assistants ten years ago didn't really address many of the issues thrown up by the last downturn.

It just played all sorts of havoc with the way that firms charged for the work that did come in, because assistant-quality work ended up being done by partners,' he says.

'Slashing assistants impacts on your leverage - and leverage, of course, drives the economics of most firms.

The question is - are you getting rid of assistants because they're no good, or because there's no work for them? The latter issue is, of course, partner related.

So the fairly unpalatable solution is to address that fact that the firm is over-partnered.'

It is the kind of management approach that has already taken hold in the City, according to Ms Jones, who has seen plenty of partners pushed out since the downturn began to bite.

'I see it regularly.

Equity partners are being made redundant at all levels.

Law firms are desperate to hold on to their good assistants, and if you get rid of a mid-ranking equity partner who is on half-a-million pounds but who lacks a big book of business, that gives you room to keep on ten talented newly qualifieds.'

Scott Gibson is a manager at recruitment consultancy Hughes-Castell in London.

He says that the firms have been more eager to keep a lid on their redundancies than they were during the last recession.

'They are keen to avoid a reputation as an employer who gets rid of you at the first sign of a downturn,' he says.

'I've seen a lot of lawyers who have received amazingly good payments, such as seven months' salary, just to go away and not let the redundancy appear in the press,' Mr Scott says.

Ms Jones agrees: 'Probably 90% of assistant redundancies have taken place behind the scenes.

Denton Wilde Sapte has taken a very open and honest approach to something that is, quite frankly, going on everywhere.'