Adopting COVID-19 Cuts, Law Firms Balance Image and Economics

The COVID-19 pandemic has taken the biggest industrywide toll on law firms since the Great Recession, with many of the same unfortunate hallmarks: layoffs, furloughs, compensation cuts and deferred classes. (See, "Pay Cuts, Layoffs, and More: How Law Firms Are Managing the Pandemic," The American Lawyer (April 20, 2020).

But even as firms echo their response to this crisis, they are also showing they learned from the experiences of a decade ago, including the negative effects of delivering cuts unevenly, clumsily or with unnecessary secrecy.

There's no one-size-fits-all communication strategy when cuts are required. But many firms have appeared in recent weeks to be signaling compassion, embracing (relative) transparency and sharing sacrifices across lawyers and staff. That can help make even painful cuts less harmful for a firm's internal morale and outside reputation, experts say.

"There is no boilerplate so long as the firm is remaining true to their core values," says Molly Levinson, founder and CEO of The Levinson Group, a strategic communications firm with offices in Washington, DC, and New York. "There is no exact equation beyond prioritizing people at this moment. The most important piece is that they prioritize their people and act in their best interest."

Levinson says firm communications reflect the values of a firm, and if the firm wants to be perceived as engaged with and supportive of its employees, transparency is key.

"Are you saying the same things to your employees that you are saying to the media?" Levinson queried. "Are you demonstrating action by looking at the big picture and making cuts on other things so you can save jobs?"

If done properly, she said, communicating even "bad" news can reflect positively on the firm.

"I think a firm that is communicating its values, underscoring its commitment to its people and its hard work for its clients is helpful. Transparency is always helpful," she said.

Kathryn Rubino, a former associate at Cahill Gordon & Reindel and Wilson Sonsini Goodrich & Rosati and now a senior editor at legal trade publication Above The Law, said that she has seen a change in the way firms are getting their message out to both employees and media outlets compared with the Great Recession, when she was laid off from Wilson Sonsini.

"Firms are a lot more open than in 2009," Rubino says. "The overwhelming majority are providing statements when we send inquiries to them. There are of course some firms that don't respond, but they are fewer and further between."

Rubino also says that unlike in 2009, when layoffs were a first line of defense, most firms are looking to pay cuts and furloughs to offset revenue losses. And while that may obviously be a matter of different economic realities, it also sends a different signal to lawyers and staff.

"The main issue with austerity is discontentment," she says. "You want to set the tone that everyone will end up hearing. If you treat your people well, that gets back to folks."

The lesson is even more true now than it was a decade ago, she says. Ubiquitous social media platforms allow employees to share information instantly and widely, and firms have come to understand that reality.

"Some firms were very much stunned in 2009 because they didn't expect their practices to see the light of day," she says with regard to the coverage of the industry's austerity measures during that time. "There was a lesson there. People are seeing that everyone is sharing information more than ever before. If you are unaware of that and rumors spread, then you are not on top of your communications game."

That means not only communication with the firm's employees, but also with the broader market, says Deborah Farone, a former communications and business development chief at Cravath, Swaine & Moore and Debevoise & Plimpton and founder of strategic legal marketing firm Farone Advisors.

"Firm leaders are communicating more openly with lawyers and staff, and most are speaking with the media with greater candor," Farone said in an email. "They are also applying thought-out planning as to how to convey these decisions. In the past, the communications aspect of these decisions was often an afterthought."

She says that in her experience advising firms, the level of transparency is significantly greater than it was a decade ago, with more firms actively seeking out media relationships to help shape the narrative of their actions.

"Leaks hurt," she says. "You don't get a chance to speak your mind and it may look like you are hiding something." [Editor's Note: Also see Deborah Farone's article with Mike Mellor, "Hearing the Voice of the Client," in this issue.]

*****

Patrick Smith, based in New York, covers the business of law, including the ways law firms compete for clients and talent, cannabis law and marketing innovation for ALM. He can be reached at [email protected] or on Twitter at @nycpatrickd.