The fiscal year that begins on July 1 for most colleges is expected to bring a wave of layoffs, as institutions grapple with declining state contributions, a falloff in donations, and other budget pressures. Eliminating jobs can create a number of legal pitfalls, including potential lawsuits for breach of contract or discrimination. If handled poorly, layoffs can even damage a university's reputation. Legal and human-resource specialists emphasize that the time to set plans and policies for reducing the work force is when times are good. Waiting until the last minute to change one's procedures and guidelines can create even greater risks for legal stumbles and lawsuits. This article presents some crucial questions and answers that legal experts say colleges should keep in mind before they consider downsizing.