While Canadian law firms haven’t started with any major cutbacks, a look at the global situation may give us a taste of things to come. Massive layoffs are being announced on a weekly and sometimes even daily basis in the U.S. and U.K. legal markets. Internet sites like abovethelaw.com and thelawyer.com are filled with reports of layoffs from firms all over the world. Salary freezes are common, as are withholding of bonuses or keeping tight control over any sort of increase.

DLA Piper, which reported more than $2.1 billion in revenue for 2007, laid off 40 staff in December, including 20 of their lawyers. Clifford Chance, the largest law firm in the world both by employee size and revenue, said late last month 100 to 120 lawyers plus 130 to 150 support staff in London are being let go in a bid to become smaller and more profitable. It had already sacked 20 lawyers from its New York office. “This is an action that we have taken very reluctantly and after a great deal of thought,” London managing partner Jeremy Sandelson told The Lawyer.

Prevailing market conditions in Canada aren’t looking all that rosy either. While there’s no doubt firms in this country aren’t suffering on the same scale as in the U.S. or U.K., there is still concern. While they may stand strong and say they’re optimistic about the future, firms can’t deny the economy is at the forefront of their thoughts when it comes to staffing decisions.

Stikeman Elliott LLP’s chief operating officer and managing partner of its Montreal office Stuart Cobbett, says, “We’re not planning any hiring cutbacks at the moment nor are we anticipating any layoffs. And we’ve told our people that.” Carol Chestnut, the director of associate and student recruitment at Stikeman’s Vancouver office, says she hopes the associates in her office feel fairly secure about their positions for now. While she points out that with 45 lawyers the office is relatively small compared to other locations and firms, they are still hiring. Recently they took on another litigator, and are now in the process of recruiting a corporate law associate. “We try to keep fairly good communication going,” she says. “There are the usual end-of-year e-mails sent by the managing partners thanking everybody for their hard work, and expressing cautious optimism for 2009.”

That cautious optimism is a theme echoed by other firms. In January, Cassels Brock & Blackwell LLP laid off 38 staff, none of whom it says were lawyers. “No further job reductions are planned,” noted Cassels Brock’s managing partner Mark Young in a press release. Andrew Tremayne, managing partner of labour and employment law boutique Emond Harnden in Ottawa says: “We’ve been through several downturns, recessions, boom-bust cycles, whatever you want to call them. And we’ve always emerged stronger with as many or more people than we entered those cycles with.”

Chestnut notes that she has discovered there are some terminations being made at other firms. “I have heard anecdotally that there are some firms that are laying people off. I have received two applications, in the last week I would say, from people who have been laid off from two different firms.”

“Everyone’s a lot more particular about hiring, and everyone is holding their cards close to their vests right now,” says Adam Lepofsky, president of legal recruiter RainMaker Group.

Hard evidence of layoffs directly related to current economic conditions is hard to come by. Firms in this country certainly aren’t admitting it. Most either declined to comment, while others spoke of recent hires being made instead. And then there are the firms that are simply positioned in a manner that will allow them to make it through the economic downturn with minimal disruptions. “Certainly here at Ogilvy Renault, we have not laid any associates off, nor do we anticipate doing so,” says Michelle Gage, director of student and associate programs at Ogilvy Renault LLP. “We are very fortunate in our diversity of practice here at the firm; it keeps us pretty well positioned to weather these kinds of economic storms.”

Gage says the firm’s diversity is allowing it to take advantage of the market conditions, rather than having to downsize in order to avoid being negatively affected by them. “We have strength in a lot of areas that are counter-cyclical,” she says, “whether its restructuring, bankruptcy/insolvency work, or employment and labour work — we’re in fact actively seeking to add an associate to our Toronto employment and labour group right now. So we’re not being impacted perhaps in the same way as our friends at other firms might be.”