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This first part in a two-part series deals with the primary risks of a “downsizing” event. In today's economy, law firms and their clients are implementing reductions in force (“RIFs”) in order to cut costs, meet profitability targets and/or correct imbalances created by growth in recent years and the recent economic downturn. In some cases, firms and their clients are simply giving up and are closing units or entire businesses.
Every downsizing event presents specific legal risks and traps for the unwary, as a number of law firms already are facing legal action arising out of the recent flood of layoffs. Therefore, before beginning the downsizing process, firm management should develop a plan that is designed to minimize litigation risk. Implementing a reasoned plan provides the needed transition towards an improved bottom line instead of costly problems.
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