The rumors started as a low hum in the hallways of midtown Manhattan and the glass towers of Palo Alto. Then, the emails went out. "Mandatory meeting at 10:00 AM." If you've spent any time in Big Law, you know that’s basically the corporate version of a "we need to talk" text from a significant other. It’s rarely good news.
Layoffs at law firms used to be a rare, "break glass in case of emergency" event. Not anymore. Honestly, the industry is currently vibrating with a weird kind of tension. On one hand, some firms are reporting record-breaking profits and $20-million-dollar partner paydays. On the other, associates are being ushered out the door with "generous" three-month severance packages and a polite "good luck with your future endeavors."
It's confusing. How can a firm be "printing money" and cutting staff at the same time?
The Stealth Layoff Strategy
Law firms are obsessed with their reputation. They don’t want to be the firm on the front page of Above the Law for firing 50 people. So, they’ve gotten smart. They use something called "stealth layoffs."
Essentially, the firm tells a group of associates that their "performance" isn't quite where it needs to be. Maybe they didn’t hit their 2,000 billable hours, or perhaps a senior partner didn’t like the tone of a memo. Instead of a formal layoff, the associate is given a "burn-off" period. They stay on the website, they keep their email, and they look for a job while technically still employed.
It keeps the firm's brand clean. But for the person losing their job, it’s a mental rollercoaster.
Why 2025 and 2026 Felt So Different
In 2025, we saw a massive spike in layoff announcements—over 1.2 million across all sectors, the highest since 2020. Law firms weren't immune. But the reasoning shifted. It wasn't just about a bad economy.
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Basically, firms overhired like crazy in 2021 and 2022. They were throwing $215,000 salaries at anyone who could pass the bar. Now, the bill for that hiring spree has come due. When M&A (mergers and acquisitions) deal flow slowed down because of higher interest rates, those junior associates didn't have enough work to do. You can’t justify a quarter-million-dollar salary for someone who is just "waiting for a deal to close."
The AI Elephant in the Room
We have to talk about AI. It’s not just a buzzword anymore; it’s actually changing who gets hired—and who gets fired.
Take a firm like Bryan Cave Leighton Paisner (BCLP). In 2025, they announced plans to cut about 8% of their global support staff. Why? Because firms are spending about 2% more on "business services" than they used to, and they’re looking to technology to bridge that gap.
AI can now:
- Draft a response to a litigation complaint in 4 minutes instead of 16 hours.
- Review 5,000 documents for "privilege" while a human lawyer sleeps.
- Predict how a specific judge will rule based on 20 years of data.
If a machine can do the work of three junior associates, the firm only needs one. The math is brutal.
The "Quiet Cutting" Phenomenon
Recent data from the Legal Intelligence Report shows a 210% surge in the use of Performance Improvement Plans (PIPs). In the old days, a PIP was a tool to help you get better. Now? It’s often a 90-day countdown to your exit.
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For every one traditional, public layoff, there are now roughly three of these "performance-driven" departures. It’s a way to trim the fat without the PR nightmare. It’s "quiet cutting," and it’s happening in almost every Am Law 100 firm right now.
Is Anyone Safe?
Not all practices are feeling the heat. If you’re in bankruptcy, restructuring, or high-stakes litigation, you’re probably busier than ever. The firms that are hurting are the ones that leaned too heavily into "easy" transactional work during the boom years.
Midsize firms are actually having a bit of a moment. While the giants are cutting, mid-market firms grew their demand by nearly 5% in late 2025. Clients are tired of paying $1,200 an hour for a first-year associate at a global mega-firm. They’re moving their work "downstream" to smaller, more agile firms that offer better value.
What You Should Do If You’re Worried
If you’re currently at a firm and the vibe feels... off, don't wait for the calendar invite.
Watch your utilization. If your billable hours are consistently below 80% of your target, you are on a list somewhere. It might be a "watch list," but it’s a list nonetheless.
Diversify your skill set. Don't just be the "M&A guy." Learn how to use the AI tools your firm is piloting. If you are the one person who knows how to prompt a legal AI to get the best results, you become much harder to replace than the person who is still doing things the "traditional" way.
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Network before you need to. Reach out to those in-house contacts now. In-house legal departments are actually growing, even as law firms shrink. Companies like Microsoft and Amazon are increasingly bringing work in-house to save money, and they need experienced lawyers to run those departments.
The Reality Check
Layoffs at law firms are a feature of the modern legal market, not a bug. The old "cradle to grave" partnership track is mostly dead.
The industry is moving toward a model where fewer, more tech-savvy lawyers do more work. It’s a "sugar high" of profits for the partners at the top, but a much more precarious environment for everyone else.
If you get the call, remember it’s rarely about your talent. It’s about a spreadsheet in a CFO's office. Take the severance, keep your head up, and look toward the mid-market or in-house roles—that’s where the actual stability is hiding these days.
Immediate Next Steps for Legal Professionals:
- Audit your hours: Check your year-to-date billables against the firm's average.
- Update your LinkedIn: Ensure your "Skills" section includes specific legal tech or AI platforms you've used.
- Secure your references: Identify three partners or senior associates who will vouch for you before any potential restructuring begins.