Benchmarking RIF Benefits

As the economy falters, a number of large law firms have executed or are considering reductions in force as a means of cutting costs and “right sizing” the firm for the amount of work available.  Traditionally, law firms have quietly asked terminated associates to “start looking around” to make the transition as painless as possible.  But, in economic down turns, firms have become more aggressive with the vast majority of firms asking redundant associates to leave immediately.  In such circumstances, we are starting to see some standard benefits developing.  While the following are not truly standardized, they do seem to represent a fairly strong consensus:

• Six months compensation for associates with more than one year of service
• Three months compensation for associates in their first year or who have accepted offers but have not yet started
• Continuation of insurance benefits for the duration of the severance period (except for associates whose offers are being canceled)
• Continued access to their firm voice mailbox and forwarding of email messages
• The offer of some level of outplacement.  Outplacement ranges from a one-day seminar to more complete counseling and coaching services.  Outplacement, if offered, is almost always voluntary on the part of the associate.

Packages for staff typically provide one week’s pay for each year of service with a minimum of four weeks.  Typically benefits are not extended except for rights under COBRA.

2007 Highest New Lawyer Year in 20 Years

Talk of layoffs comes after what was the strongest year ever for law school graduate hiring.  In 2007 43,518 people graduated from 197 accredited law schools.  Of those, 37,123 are employed.  55.5 percent (20,603) are in private practice, 9.8 percent are in judicial clerkships, 14.1 percent are employed by businesses and 10.7 percent by government.  91.9 percent of graduates have found employment but 16.3 percent of grads accepted jobs that do not require a law degree.

IM Gaining Favor

Using text messaging at work is less, not more, disruptive, even as it promotes more frequent communication says an academic study.  In fact, the study found that workers using instant messages, as opposed to emails or telephone calls, lead to “briefer, more frequent interactions in order to get quick answers to work-related questions with minimal disruptions.” 

The study published in the Journal of Computer-Mediated Communications was designed to show that the use of text messaging adversely affected worker productivity because it increased disruption on the job given that it was used in addition to phone and email.  But the study found that the reverse was true.  Workers who IM tend to do so in place of – not in addition to e-mail.  IM’s give users more control over conversations than other forms of communication, including face-to-face and, therefore, tend to invite shorter, tighter responses.

Mileage Reimbursement

With gas prices averaging $4.00 per gallon, many firms are faced with the reluctance of their lawyers and staff to use their own cars for firm and client business.  Several law firms have observed that their lawyers’ usage of car services and auto rentals has increased dramatically.  As one CFO told us, “We typically see travel reimbursement reports with charges of $30 or $40 for driving to the airport plus the charge for parking.  Now almost everyone is taking car services that cost $80 to $100 each way.”  But, apparently the biggest change is lawyers renting cars to drive to suburban client locations rather than drive their own cars. 

But a lot of concern may be abated. Last week, in a rare mid-year adjustment, the IRS announced a 16 percent increase in the mileage reimbursement standard for businesses.  The new rate, effective June 23, 2008 is 58.5 cents per mile.  Average pump prices were at $3.07 at the end of 2007 and, as of last week, were $4.01.  The IRS mileage reimbursement standard is the amount that taxpayers may deduct for business or charitable use of an automobile but is widely adopted by businesses as the standard for which employees are reimbursed for using their personal car for business. It is also the rate that many law firms use to charge clients for use of a lawyers personal car. 

For firms where there is still dissatisfaction over reimbursements, a consulting firm, Corporate Reimbursement Services (www.crsinc.com), will prepare a customized reimbursement calculation designed to take into account the specific circumstances of a drivers’ locations, automobile, driving habits, maintenance levels and similar factors.

Goin’ Green

Becoming more environmentally friendly has become a priority for many law firms.  Being “Green” is viewed as a strong recruiting tool for both lawyers and staff but is also a consideration in many client RFP’s.  NALP has been cataloging the Green activities of law firms.  Cadwalader, Wickersham & Taft’s New York office has perhaps the highest profile in the legal community for their environmental efforts.  Among their initiatives are:

·         placing blue recycling bins in their conference rooms.

·         stopping the use of water bottles in the conference rooms; when an employee requests water for a meeting, a pitcher of water is provided to reduce the number of plastic water bottles used in the firm.

·         Styrofoam has also been completely phased out from the dining room and pantries with ceramic mugs have been placed throughout the firm for hot beverages and plastic cups for cold beverages. Paper cups are also available in the dining room for take away. In addition, the firm has placed recycling bins for glass and plastic bottles in the dining room and pantries, along with another recycling bin for the brown cardboard take away boxes. Although the firm is researching different plate, bowl, and silverware options, they are encouraging all employees to use real silverware and china if they are dining in.

·         On Earth Day in 2008, Cadwalader, Wickersham & Taft encouraged employees to place a new tagline under their email signatures to remind people to “please consider the environment before printing this email.”

Among the most common activities are the creation of Green Teams (Cadwalder, Drinker Biddle, Freshfields, Weil Gotshal, Sonnenschein Nath & Rosenthal, O’Melveny & Myers and Seyfarth Shaw).  Reed Smith gave gifts of reusable grocery sacks.  A number of firms, including Kattan Muchen and Linklaters gave out “Go Green” mugs.  Benesch Friedlander is installing motion sensor lights in their offices and Davies (Montreal) is planning to mandate double-sided printing throughout the firm.  Weil Gotshal DC has replaced sedan service with hybrid black cars.