Three guesses what these numbers represent:
| Blank Rome | 20 |
|---|---|
| Cadwalader | 35 |
| Clifford Chance | 6 |
| Hunton & Williams | ?* |
| Paul Hastings | ?* |
| Powell Goldstein | <10 |
| Sonnenschein | 37 |
| Sutherland Asbill & Brennan | 15* |
| Thacher Proffitt | 24 |
| Thelen Reid | 26 |
| Total | 174** |
*not verified
**assumes "?" = 0
Yes, obviously, the number of associate layoffs admitted to by
the various firms (hat tip to Above
the Law). Obviously, I have not been able to include firms
that have implemented stealth layoffs or, inhumanely, dismissed associates
for "performance" reasons when that was actually not the case. ("Inhumane"
because of the enormous blot it leaves on the target’s resume: Far better
to call a spade a business downturn and leave the hapless associate to the
mercies of the market—but at least an accurately informed market.)
Of
perhaps even greater materiality—but equivalent or greater uncertainty—is
the number of associates yet to be, uh, excused. As reported in The
Lawyer, "another recruitment consultant, Larry Mulman of Major Lindsey & Africa,
puts it [this way]: "To an extent, the downturn in structured finance
has provided an excuse for firms to look at other practice areas and to cut
dead wood. Within the boundaries of good taste, firms are going to try to get
as lean as they can. We’re going to see more.""
But this is not a column about layoffs.
It’s about requiring arbitration of associate employment
disputes.
Assuming arguendo mandatory arbitration clauses are
enforceable (I’m not an employment lawyer and never will be), the benefits
to the firm and for that matter to the associate seem compelling:
- Confidentiality. Arbitration proceedings can be conducted
essentially under seal, and all the inevitable and predictable nastiness
kept off the record, clearly for the benefit of both the firm’s and the associate’s
reputation. - Finality. Arbitration proceedings, absent drastic irregularities
such as perjury or fraud, are all but impossible to appeal or overturn. - Speed. Although arbitration is getting more, not less, complex
in terms of discovery and briefing, it remains quicker and more economical
than full-dress court proceedings. - No punitive damages. Although arbitrators theoretically
can award punitive damages (and agreements to waive them in advance may be
deemed contrary to public policy), they hardly ever do. And the professionals
who typically make up the composition of arbitration panels are far less
likely to have their passions inflamed than your average jury.
Is arbitration a panacea? Obviously not. But the current environment
has to start one thinking about minimizing repercussions to firms as we proceed
through and eventually out of this weird and bitter economic stew composed
of equal parts liquidity freeze, housing market slide, financial sector contraction,
consumer confidence plunge, systemic over-leverage, commodity inflation worries,
historically high oil prices,… (Do you want me to go on? I
thought not.)
That said, I’m not aware of any AmLaw firm that requires arbitration
in associate employment agreements. If I’m wrong, please let me know!
This brings us to the crux of the problem: No one wants
to be first. Understandable, but not insoluble.
Firms have managed to reach magical and mysterious agreement
parity on any number of other characteristics of associate employment, without
running afoul of 15 USC §§ 1—27, and I’m about to suggest they
could conceivably do the same with mandatory arbitration.
All you have to do is read this very column on "Adam Smith, Esq." There: How
hard was that?
Far be it from me to tell you what to do on this score. But
we already have 174 reasons, and counting, to think about this.
Update 26 June, 8:00 pm:
Helpful readers have pointed me to this
story about Kirkland & Ellis’ mandatory
arbitration policy (apparently effective this past February), which also lends
support to the notion that mandatory arbitration is enforceable ("continued
employment in most states is adequate compensation [sic: consideration?]
for an arbitration procedure")—unless you’re in California.
There,
the Ninth Circuit struck
down O’Melveny’s arbitration agreement with its
own employees, finding it "procedurally unconscionable" because presented
on a take-it-or-leave-it basis. Well, at least it wasn’t substantively
unconscionable. (The O’Melveny case may be an outlier, as its stricken
clause was evidently asymmetrical, allowing the firm to sue employees but
not vice versa, as well as forbidding employees from filing discrimination
or administrative claims with labor regulators.)
I’ve also heard that Wilson Sonsini began signing new associates to mandatory
arbitration after the dot-com meltdown, but I have no independent verification
of that, and, given the O’Melveny decision, it may be moot whether they do
or don’t.
