Law Firms and Layoffs

Law firms, like most businesses in these dire days, are laying off a lot of people.  In doing so, like any business, they have to consider the threat of lawsuits by individuals who have been laid off.  Catherine Padalino, the worldwide employment practices liability manager for the Chubb Group of Insurance Cos., has some wise advice for businesses of all sorts, including law firms, on how to minimize these threats:

– First (of course, given the source) have insurance against the risk.

– Evaluate the overall anticipated impact of the layoff, including the potential for litigation as well as public scrutiny.

– Use quantitative criteria such as tenure and performance, rather than “soft” criteria such as social situations and financial hardship, to determine which employees to let go. Be consistent in applying the criteria, which should be communicated to all employees.

– Review the demographics of the staff that will be laid off to eliminate any appearance of discrimination. Consider the status of each employee, including whether he or she recently requested a leave under the Family Medical Leave Act or filed a workers’ compensation claim.

– Use outside counsel to evaluate employment practices and severance policies. Law firms should refrain from self-diagnosis.

“Most important,” said Padalino, “remember to treat all employees-those who will be laid off and those who will stay-with dignity. Laying off employees is unpleasant, but firms that try to do the right thing can help mitigate the potential for an even more unpleasant EPL lawsuit.”