Being laid off is not fun, to put it charitably, and for many, it can be a very traumatic experience that impacts one’s livelihood and identity.
Layoffs can happen in all shapes and sizes, from publicly announced actions to stealthy dismissals, and they can happen at companies, law firms, non-profits and in the government. And, lawyers aren’t immune from them.
Oftentimes euphemistically referred to as downsizing, employee actions, right-sizing the workforce, reducing OpEx (operating expenses) or RIFs (reduction in force), layoffs can impact anyone from the highest level attorney (General Counsel, Partners) to the lowest ranking employee.
Sometimes, layoffs come as a complete surprise and other times they’re somewhat predictable or anticipated (e.g. realizing synergies when a target company is acquired, loss of major clients or insufficient number of billable hours to support law firm headcount).
Hopefully, none of you has or will ever have to experience a layoff, but it is always better to be prepared to the extent possible.
Whether you anticipate that you may be laid off or you have already been laid off, there are a number of actions that you can can take. Below are 11 tips for planning for and/or surviving a layoff:
1. File for Unemployment
If you are laid off, file for unemployment insurance in accordance with the requirements of your state. Some may object to collecting governmental assistance on principle, but I suggest you look at it this way: you’ve paid into the government’s unemployment insurance program. No one ever wants to collect on insurance because that means something bad has happened, but that’s what the insurance is there for. Unemployment is there to help. If the law grants you the benefit, take it.
2. Financial Planning Part One: Expense Assessment
Take stock of your expenses and calculate your monthly spend on everything from big-ticket items like housing and car expenses to the small items. Make a determination as to which expenses are fixed and which are discretionary. Going through this exercise will help you determine your current spending levels, what you would need to sustain it and whether there may be areas you can cut.
3. Financial Planning Part Two: Assess Your Savings
If you don’t already know, figure out what your savings looks like. What funds do you have in your bank account and other short-term cash sources. Understand what your severance or what a potential severance package may look like (remember, you have to pay taxes on the severance funds) and what, if anything, you’ll receive through government unemployment insurance.
Add these amounts up to determine how many months of living expenses you have. From there, consider whether there is anything you can or want to cut so that you can make your savings last longer. This will help you assess how long you can go without taking on another job and whether you need to take the first offer you get or whether you can hold out for something better.
4. Adjusting Your 401(k), HSA and other Payroll Deduction Items
If you think that a layoff may be coming (i.e. weeks or better yet, months, away), you can make some payroll-related adjustments to prepare.
Depending on your personal situation, you might want to either decrease or increase your contributions to your retirement accounts, HSA or other items that get deducted through payroll. If you already have a healthy cash cushion to support living expenses, you might decide to increase your contributions to your retirement accounts so that you can max out your contributions for the year before the layoff. On the flip side, if you’re worried about building a cash cushion in the event of a layoff, you can stop your retirement contributions so that your paychecks provide you a little more cash.
5. Deal / Case / Project Summary Sheet
Maintain a running list of your projects, including accomplishments and lessons learned. If you have a sense that layoffs are coming, take the opportunity to look at your office records while you still have access to them to reflect on what you have worked on.
Note, I’m not suggesting that you take company records in contravention of your duties to your clients and company. Rather, it is good practice to keep a running tally of what you’ve worked on and how you have grown as an attorney. This will help you as you consider your next career move and will be handy for updating your resume and for interview talking points.
6. Continuing Legal Education
Being laid off may result in you being unceremoniously escorted out of the building. If your CLE records are a jumbled mess, it may be hard to recreate a record of what CLE you have done and where your certificates are. Make it a practice to keep your CLE certificates in a folder or better yet scan them and email yourself copies.
If you think that a layoff may be coming and that you might be included, look for opportunities to get free CLE through your employer while you can. Many large law firms have their own internal captive programs. Many employers offer free subscriptions to online on-demand CLE vendors like PLI. Use those resources while they’re still available to you, and you can save yourself a bundle of money. Better yet, try and find the CLE programs that may help you when you’re looking for a new job.
7. Reviewing and Signing the Release
If you’re laid off, you may be asked to sign a release, which typically is a condition to receiving severance from the company. If you don’t understand the release or are unsure about your rights, consider consulting with a fellow lawyer who practices employment law. Even though you may be a highly trained lawyer, being laid off can be a traumatic event, and you want to be clear-headed about what rights you are signing away.
8. Get Your Annual Physical
If you haven’t been laid off but think you might be, consider getting your annual physical done. Under many medical plans, the annual physical is free. Take advantage of that, especially if you’re not planning on electing COBRA coverage after your termination.
9. Spend Your FSA Funds
The full amount of your FSA is available on the first day of your plan year even though you’re contributing up to the full amount over the plan year. If you are reasonably certain that you are going to be laid off, you may want to consider using up those funds on qualified medical expenses before the layoff.
10. Take Care of Yourself Emotionally
Layoffs can be traumatic events, particularly when the come as a complete surprise, and different people react differently. Some people become angry, others get sad, some people become numb and others withdraw.
Being laid off isn’t good news (*exception: see #12 below) and can stir up strong and complicated emotions. Now is the time to take care of yourself, to seek out your family and friends and to seek spiritual support as needed.
11. Preparations for Job Hunting
Update your resume and Linkedin Profile. If you aren’t an active networker (I’m not, I dislike it, and I should be better about doing it), start reaching out to people in your professional circle and ask people to let you know about opportunities. Talk to recruiters and start to evaluate the job market for someone with your experience and skills.
12. Volunteering for a Layoff
If you are unhappy with your job, ready to make a change, and/or on the cusp of retirement or financial independence, volunteering to be on the layoff list can be a great way to fund your next steps if the layoff comes with a severance or if you can negotiate a severance. I know a lot of people who have gone down this path with great success – I have seen this work particularly well when the person asking for the layoff is respected and liked by her supervisor. The Financial Samurai has a whole book on this topic called “How to Engineer Your Own Layoff”
Are there any other tips that you can think of?
