This paper reviews legal risks associated with staff layoffs at institutions of higher education and methods for managing those risks and describes planning steps designed to minimize institutional legal exposure. Legal risks include claims of breach of contract, discrimination, tortious conduct, and violation of labor laws, collective bargaining agreements, and other legal obligations. Well-managed institutions exhibit three common characteristics in planning and implementing staff layoffs: (1) a team approach to decision-making; (2) development of well-crafted and consistently administered personnel policies before initiation of the layoff process; and (3) attentiveness to existing and potential problem cases. Prior to implementing staff layoffs, institutions should: first, ascertain the reasons for and magnitude of the downsizing; second, prepare to counteract the argument that downsizing can be avoided by increasing revenues or cutting expenditures elsewhere; and third, prepare to show that the institution has considered alternative reductions in nonpersonnel expenditures, e.g., furloughs; reduced work time; hiring freezes and elimination of positions through attrition; and negotiated retirements. Preparation for the least disruptive layoff process requires advance communication with affected employees, consideration of quantitative and qualitative layoff criteria, a pre-implementation review, and establishment of an acceptable appeals process. Provision of severance benefits to affected employees and attention to the residual effects on remaining employees are components of a prudent risk management strategy. (CK)