Big 4 Corollary Is The Non-Selling Senior Manager or Director

Whether without selling skills or “hobbled by those above her who were worried that clients would prefer her over them”*, the Senior Manager or Director who does not have clients or new engagements to their credit is a most expensive burden for the accounting firms. It may also be that experienced hire that realizes too late that half the contacts and potential business referrals she had are “independenced” out, another 25% are already working with the firm but in another office and “they don’t need your help”, and the remaining 25% are “of no interest to us.”

Notwithstanding the fact that since the partners never show up at the client unless there is an Audit Committee meeting and someone has to be running things, including the numbers and the billing, and the staffing, it’s hard not to see it from the partners’ point of view. Less people equals more profit per partner. 

Some firms have already selectively cut these resources. Frankly it makes a lot more money sense to cut higher paid, more demanding folks than a bunch of 1+ year associate sheep. More bang for the buck. Damn the quality or work-life balance issues.
Senior Managers and Directors, however, are usually a little more savvy and have more relationships as a result of their many more years of experience than the firms sometimes count on. 
God forbid they should end up at one of the firm’s clients after being let go! 
Yeesh!  That would be uncomfortable.

Law Firms and Layoffs: Who Are the Most Vulnerable?

…The firing of Shinyung Oh, which has been the talk of the biz this week (click here for an interview with her and here for her performance review), points up just which big-firm lawyers might be most-vulnerable in this economic malaise.

It’s not the partners with the big books of business. They’re more in demand than ever. And it’s probably not the super-junior associates, either. Firms have just spent a fortune recruiting them and still don’t know their potential. “You can’t identify that early who’s not going to be a good performer,” says Dan Weiner, co-chair of the personnel committee at Hughes Hubbard, with whom we spoke about this brouhaha yesterday. You’d be “cutting them before you know their performance capabilities, which is not good business.”

No, the most vulnerable are the folks in the middle, lawyers say. These are the junior partners, counsel and senior associates who are paid a lot and so have to be super productive to justify their salaries.

It’s an issue that was spotted earlier this year by Dan DiPietro at Citi and Brad Hildebrandt in their joint report on the industry. The report flagged a concern about the cost to firms of “income partners” and other non-equity lawyers. “Many firms are now bloated with some income partners performing mostly associate-level work while, at the same time, generating less overall profitability.”

Weiner (who was talking generally and not about current conditions at Hughes Hubbard) says that when times get tough, firms look at “expensive people who are underutilized” starting with partners and then “going down to counsel and senior associates” based on performance…

*See comments to the WSJ Law Blog post.