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Kirkland & Ellis Implements Stealth Layoffs Amid Economic Downturn
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Kirkland & Ellis, World’s Richest Biglaw Firm, Implements Stealth Layoffs

What are stealth layoffs and how do they impact associates?

As the global economy continues to struggle, many large corporations and businesses are feeling pressure. Unfortunately, this often means that employees are the first to feel the impact as companies look for ways to cut costs and stay afloat. One such tactic that has become increasingly common in the legal industry is using stealth layoffs.

A stealth layoff is a way for a company to reduce headcount without officially confirming financially motivated layoffs. This can take the form of letting associates go or giving them a specific amount of time to find a new job. The firm will often couch the reductions in terms of performance, making it seem as though the layoffs are the result of poor performance on the part of the associates, rather than a financial decision made by the company.

One of the biggest firms to recently implement stealth layoffs is Kirkland & Ellis, a global law firm that made $6,042,000,000 in gross revenue in 2021. According to Law.com, the firm has let go of multiple corporate associates in Texas following performance reviews. The report states that the firm is contending with a downturn in corporate work and overcapacity of transactional hires made in response to last year’s surge in demand.

  
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Sources with direct contact with affected individuals said that trimming associate ranks is a common practice for Kirkland & Ellis and other big firms, as the year’s end occasions a hard look at the financial performance of various practices and the performance of individual associates. However, market conditions have made certain practices more vulnerable than others. Some sources have said that the latest round of cuts at Kirkland appeared to target more corporate associates than other practices.

As many as 20 to 25 associates in Kirkland’s U.S. offices could have been affected by the cuts in the last several weeks. Associates who were let go had reportedly been given warnings about low billable hours and other performance issues and were offered several months’ severance for signing a nondisparagement agreement.

It’s worth noting that stealth layoffs can be detrimental to the morale and well-being of the associates who are let go and the remaining associates who may feel insecure about their own job security. The practice also tends to push the blame for the cuts on the associates themselves when, if the economy remained just a bit stronger, those same associates would likely still be getting stellar reviews and total bonuses.

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The use of stealth layoffs by Kirkland & Ellis, the world’s richest big law firm, serves as a reminder of the harsh realities of the current economic climate and the impact it can have on businesses and employees. As the legal industry faces challenges, firms need to be transparent and considerate in their approach to layoffs and cost-cutting measures.

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