These are happening all around and I think they're pretty unfair. The deal is that firms that don't want to end up on very public layoff lists are secretly letting associates go for "performance-related" reasons. It's hard to argue that any lay-off isn't performance related to some extent (after all, you don't get rid of your top performers)... but it seems to me that there's an element of unfairness in pretending like people you're letting go are really being fired for failing miserably when, in fact, it's the partners who failed to make a profit.
Also, this article is pretty accurate:http://www.sweethotjustice.com/2009/02/05/layoff-code/
It's hard to deal with zombified stealth layoff victims at work, especially if they're friends and colleagues. What is worse, however, is not the empathy you feel... but that each of these people is a reminder that the firm is not doing well and that you could be next.
Life in big, middle and average law is pretty depressing right now.