Our Redundancy Watch posts were a regular feature (almost daily at some stages) for a while as firms reacted to the financial crisis. Thankfully mass redundancies have fallen out of the headlines in recent months but there is still the odd bit of bad news – Clifford Chance let eight capital markets lawyers go earlier this month and Denton Wilde Sapte initiated a redundancy programme for secretaries and support staff in October – but hopefully the worst is past.

We say hopefully because there is evidence that the sharp blade of the layoff axe has not been retired, merely resigned to a nearby cupboard where it can be easily reached. The evidence is twofold; firstly the PwC annual law firm survey which we drew your attention to a little over a week ago stated:

Against a backdrop of continuing challenging economic conditions and chargeable hours falling by up to 20%, some firms are expected to continue with staff headcount reductions in FY 2010. Across many grades of staff, chargeable hours are now running at levels below that of 2006. There is also severe pricing pressure which is putting even greater strain on firms’ operating models.

And as if that wasn’t enough to get fraught associates (and maybe some partners) reaching for their sleeping bags and curling up under their desks to prove their committment, there is this ominous report from the Gazette:

Top City firms are preparing for a possible second wave of job cuts by making sure they have secured adequate lines of credit from banks to cover further redundancy payouts, according to one of the sector’s major lenders.

Mark Dean, director in the law firm group at Citi Private Bank, which lends to firms at the ‘top end’ of the market, told the Gazette that top firms had wanted recent restructurings to be one-off exercises, ‘but if it turns out to be a double-dip recession, we’ve been told that they will do it again’.

He said that firms are ‘sticking very close to their bankers’ and securing assured pipelines of cash should they have to pay off redundant partners once again.

Click here to read the whole thing >

One would expect firms to be prepared for the worst as we head into an uncertain new year. And technically the UK has not actually come out of recession yet (a double dip implies we go back up before we go back down again) so that may offer hope. More broadly, even if the UK has not yet seen a return to growth, many other countries have – the 30 members of the Organisation for Economic Co-operation and Development (OECD) grew by 0.8% in July to September. So some cause for optimism at least.

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