The Most Efficient Conflict Resolution is Prevention: Avoiding Suit During Era of Massive Lay-offs

The British call layoffs “redundancies.”    I prefer the American term – layoff –  because it focuses on the employer’s need in times of economic stress (“I can no longer afford to pay you and so must lay you off) to the British locution which focuses on the employee’s presumed inefficiency (“because your work is being performed (better?) by others, you have become redundant.”)

Why the attention to semantics?  Because in times of massive law firm layoffs (see Law Shucks Lay-off Tracker here) you don’t want today’s efficiency become tomorrow’s crushing legal liability.

Lawyer Layoff Paranoia by the brilliant Charles Fincher at LawComix.com.

So how do you avoid the looming threat of litigation by laid off employees?  According to researchers, you terminate graciously, honestly, with expressed respect and compassion, and, if possible, with offers to help the laid off employee find work and replace critical benefits such as health insurance. 

Why do terminated employees bring suit?  It’s not, as I’m always saying, just about the money. 

Researchers have found, for instance, that:

  • Feelings of unfair, insensitive treatment at the time of termination had nearly twice the effect of the next most potent factor in bringing suit.
  • Blame was not strongly related to the claiming process
  • There is some, but slight, support for the proposition that certain groups — women and minorities – are especially likely to sue
  • Perceptions of poor on-the-job treatment motivate lawsuits as much or more than an individual’s belief in his or her ability to prevail in litigation
  • the shorter the notice of termination, the greater the likelihood of suit

Finally, and most importantly for law firm management, the best predictor of a former employee’s willingness to file claims for wrongful termination was highly educated respondents.

Researchers have also catalogued the most common on-the-job experiences that lead to litigation, including most prominently,

  • negative experiences with supervisors;
  • the belief that processes used by the supervisor are unfair.
  • violations of procedural justice (the perceived fairness of the procedures by which outcomes are determined)
  • perceived violations of equity and distributive justice  (the perceived fairness of outcomes)
  • perceived violations of interactional justice  (the perceived fairness of the nuances of interpersonal treatment)
  • survivors’ attitudes toward their organization are strongly associated with their beliefs about the fairness of the manner in which their companies laid off other workers

“Blaming and claiming” activity (lodging grievances; seeking relief from the EEOC; retaining legal counsel to file suit) is strongly correlated with the manner in which employees are terminated.

Why?

Because Termination Causes Employees to Reevaluate Fairness in Working Conditions.  And you do not want to give employees the opportunity to reevaluate those conditions in light of their last employment experience – termination – unless that experience is positive.

The researchers have found that:

  • people react strongly to nuances of treatment and style at the time of termination
  • the quality of dismissal affects people’s decision to bring suit as much as termination itself.
  • a fair, honest, and dignified termination should substantially reduce the temptation to retaliate through litigation.

The experts therefore recommend that employers:

  •  treat their laid-off or fired employees with compassion and respect at the time of termination
  • give several weeks advance warning to all laid-off or fired employees
  • provide terminated employees with help in finding new employment
  • give terminated employees honest accounts for the cause of their termination
  • provide transitional alumni status to terminated employees when possible
  • provide symbols of positive regard to terminated employees such as letters of reference, departure gifts or parties
  • offer counseling services to terminated employees to ease the psychological shock of employment termination

According to a recent ABA Journal article entitled One Lawyer Layoff Saves an Average of $250,000 also notes that:

  • some of the savings from layoffs is initially eaten up by severance payments
  • at least one firm chairman indicated that the firm pays about $7 million in severance for every $10 million saved in compensation
  • another firm chairman estimated that it takes about nine months before any savings are realized by lawyer layoffs.

If law firms don’t want these savings to start bleeding red ink, they’d do well to study “naming, claiming and blaming” behaviors of terminated employees and to implement processes and procedures to reduce the potential for litigation flowing from these cost-saving measures.

For further reading, see my own Power Point Presentation from which most of the above statistics were taken here and the article from which most of that information was derived:  The Winding Road from Employee to Complainant here.

                        author

Victoria Pynchon

Attorney-mediator Victoria Pynchon is a panelist with ADR Services, Inc. Ms. Pynchon was awarded her LL.M Degree in Dispute Resolution from the Straus Institute in May of 2006, after 25 years of complex commercial litigation practice, with sub-specialties in intellectual property, securities fraud, antitrust, insurance coverage, consumer class actions and all… MORE >

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