For Firms, This Year May Not End With Lavish Parties

By Anne Urda

Law360, New York (November 07, 2008) -- With the economic crisis in full swing and people being laid off left and right, one big question remains to be answered: Will law firms still have their over-the-top holiday parties this season?

Over the years, the lavish affairs have turned into a horse race of sorts, with each big-name firm seemingly determined to out-holiday-party the other as tens of thousands of dollars are shelled out for the extravaganzas.

To close out 2007, lawyers at Wachtell Lipton Rosen & Katz partied at the iconic St. Regis while attorneys from New York power player Cravath Swain & Moore LLP held their traditional soiree at the posh Rainbow Room.

Cadwalader Wickersham & Taft LLP threw a “Wild Wild West” theme party at their Wall Street offices last year, featuring such touches as a general store where associates could grab as much candy as their well-paid hearts desired.

In a year where firms have not been exactly shy about axing significant portions of their workforce, the question has arisen over whether the decadent holiday affairs should continue.

Most recently, Katten Muchin Rosenman LLP cut 20 people loose, a move that came on the heels of the dissolution of Heller Ehrman LLP and more layoffs at Sonnenschein Nath & Rosenthal LLP and Clifford Chance LLP.

Other firms that have laid off attorneys or support staff in the past year or so include Cadwalader Wickersham & Taft, Duane Morris LLP, Fried Frank Harris Shriver & Jacobson LLP, Thelen Reid Brown Raysman & Steiner LLP, Dechert LLP, Jenner & Block LLP, Powell Goldstein LLP, Holland & Knight LLP and Sutherland Asbill & Brennan LLP.

In light of the economic downturn and ongoing layoffs, some firms have already taken the unusual step of calling off their holiday parties entirely.

Just days ago, Fried Frank notified its staff that there would be no holiday party this year, voicing its belief that such a move would be inappropriate “in light of continued turmoil in the financial markets and the wider economy.”

“The firm has a strong platform and business with which to succeed in this very demanding business environment and continues to be involved in many interesting and challenging matters for our clients,” the letter said. “Instead of the parties, the firm will be making charitable contributions to certain organizations who rely on donations during the holiday season to accomplish their purpose during this time of year and which are feeling the effects of the slowdown in the economy.”

Foley & Lardner LLP also voiced its intention to go the charity route instead of holding its annual shindig for the Orlando business community, echoing the belief that throwing a big party for its clients in such tough times might be considered crass.

“It was a wonderful tradition for us, but as we saw the needs in the Orlando community this holiday season, we felt the money could be put to better use helping our neighbors,” said firm spokesman Kyle Heath. “We are donating a substantial portion of the money that would have gone into the party and giving it to a variety of charities in the Orlando community.”

Heath also noted that at least one other firm in Orlando had canceled its party, perhaps alluding to GrayRobinson PA, which recently announced that it would also forgo the client holiday party and donate the $150,000 traditionally earmarked for those purposes.

"The unprecedented volatility in the financial markets is having a very real impact on families in Florida. Our firm has been very fortunate over the past year, and we believe that we have a responsibility to help support those in need,” said President Byrd F. "Biff" Marshall Jr. “We encourage every organization that has the means to consider a deeper level of outreach as we enter this holiday season.”

Alex Martins, chief operations officer for the Orlando Magic, praised the firm's decision to help those less fortunate rather than throw a party for the who's who of the area.

"We support the decision by GrayRobinson to forgo the holiday party this year. It's a clear reflection of the firm's very sound and compassionate point of view. While there are a lot of us who will miss the fellowship of the party, we agree that's just not where our priorities should be as we approach this holiday season," said Martins.

Law firms are hardly the only ones feeling the pinch, with investment giant Morgan Stanley and ABC News also revealing that there will be no holiday parties this year for either outfit.

But while the decision to donate the money is laudable, some firms see a value in going forward with their party plans and have rejected the need to throw the baby out with the bathwater, so to speak.

Shearman & Sterling LLP, determined to celebrate the staff's achievements in the midst of a difficult year, has opted to go for a scaled-back version of its traditional holiday party.

“It’s important to get people together for a little social event at that time of year, especially when it’s been as tough a year as this,” said Peter Horowitz, a spokesman for the Wall Street firm, according to the New York Times. “But at the same time, you have to make sure that you don’t go overboard.”

For law firms, image is important, and celebrations might help to assuage fears that their places of business will soon go the way of Heller Ehrman — which collapsed earlier this month — or to keep pace with other places.

After a rocky year, many associates are fearing for their jobs, and allowing a celebration to continue could help rally the troops in addition to rewarding everyone for a year of hard work.

A public display of financial confidence could also help in terms of recruiting as third-year law students generally struggle to decide by late December whether to accept a summer offer.

Kaye Scholer LLP just announced that its New York office would go ahead and have a holiday party at The Pierre hotel this year, with employees allowed to bring a guest to the festivities as well, according to popular legal gossip site Above the Law.

But the decision to have a big extravaganza could be a double-edged sword, with firms potentially garnering negative attention for spending major moolah in a time of financial crisis and ongoing layoffs.

Kaye Scholer's move has already generated some negative feedback on Above the Law, with some comments suggesting that fired employees' salaries are being used to pay for the soiree.

Wrote one respondent on the site: “Hmm ... Conduct stealth layoffs (and avoid showing up on the 'official' lay-off lists) ... Spend more on the holiday party when other firms are canceling theirs (PR ploy?).... I wonder what other decisions the firm makes solely w/ its 'image' in mind.... Personally I think a firm's image takes a bigger hit w/ such transparent attempts at appearing healthy, but maybe thats just me.”

At the end of the day, most associates might prefer to keep their jobs than have a fancy end-of-the-year party. Not that a Wild West general store isn't nice.