Law firms cut costs, staff as billings slide
Boston Business Journal - by Lisa van der Pool
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Staff and attorney layoffs are finally hitting Boston’s law firms.
After months of deep cuts at national law firms, reality hit the local legal market just before the Thanksgiving holiday, as local legal leaders now agree that many Boston firms will not escape painful layoffs.
“Pre-meltdown, in September, our sense of the market was that as corporate and M&A transactions slowed down, firms were still being very patient and they wanted to see how the year would play out,” said Brion Bickerton, a partner at the legal search consultancy Major Lindsey & Africa LLC in Boston. “Post-meltdown, one had to anticipate that the firms were going to have to re-look at some of their plans and accelerate some of these decisions. When the tide is going out, one way to keep your boat afloat is to have fewer bodies in it. One anticipates that the dominos will start to fall in the city, in terms of increased layoffs.”
In fact, those dominos have already started to fall. On Nov. 20, Brown Rudnick Berlack Israels LLP announced it had cut 20 lawyers, three paralegals and 20 other members of its staff firm-wide. The firm, which has a total of about 200 lawyers, attributed the layoffs to the global credit crisis and the economic downturn.
In a note to the firm, Brown Rudnick CEO Joseph F. Ryan said that “while we carefully considered all other options, we reluctantly concluded that the painful steps taken today are a necessary response to these adverse economic conditions.”
Earlier this month, Edwards Angell Palmer & Dodge, which has a total of 530 lawyers, slashed around 50 staff jobs, about 25 of which were in Boston, but said it did not cut any lawyers.
Meanwhile, firms that have Boston offices, including Holland & Knight and Bingham McCutchen LLP, have cut staff or lawyers in other parts of the country in recent months, according to press reports.
Rumors continue to swirl that more than a handful of firms will be forced to cut staff during this downturn, as corporate and real estate transactions have slowed to a trickle. Most recruiters and industry watchers predict that many more firms will cut costs through staff and attorney layoffs in 2009.
It remains to be seen if the area’s three largest law firms — Ropes & Gray, Goodwin Procter and WilmerHale — will follow suit. The firms have been tight-lipped to date.
“We have been well-served in this changing market environment by our diversified practice mix and our client base,” said Ropes & Gray spokesman John Tuerck. “We believe we are well-positioned for these turbulent times, but it’s our policy not to speculate about the future.”
Goodwin Procter and WilmerHale did not return calls for this story.
“They’re trimming their sails to be prudent,” said Jeff Coburn, managing director of Coburn Consulting LLC, a law firm consultancy in Boston. “If (the recession) really gets serious, that’s when you’re going to see partners (being laid off).”
Although law firms are reluctant to cut lawyers out of fear that such moves may crimp their efforts to recruit summer associates, many firms likely now think that there’s safety in numbers.
“I think it’s taken some of the heat off many of the firms; it’s almost expected at this point,” said Judy St. John, a senior consultant in the legal division of Hoffman Recruiters LLC in Boston.
“Many associates have been calling, looking for jobs, telling us they have not been laid off, but that they are fearful. Most of them know that it’s grim out there and there are very few job opportunities.”
Nationally, the legal press is filled with frequent updates of firm layoffs. Global law firm White & Case LLP, which is headquartered in New York and has over 2,100 attorneys, cut 70 lawyers and 100 employees earlier this month, according to press reports. Earlier in the year, the 600-lawyer firm Cadwalader, Wickersham & Taft cut around 130 lawyers, according to press reports.
The mood from just one year ago, when the legal industry was experiencing one of its best years ever, has shifted dramatically. As layoffs increase, the frame of mind among both lawyers and staff at firms is tense. People are nervous about their jobs, insiders say.
One poster on the legal industry Web site, Abovethelaw.com, last week described the current mood: “This is carnage. Any thoughts as to which firm is next? Or predictions as to the total number of attorney layoffs in 2008 and 2009?” wrote the poster. “Being a lawyer in all this mess sucks, and I feel just as bad for law students.”
Lisa van der Pool can be reached at lvanderpool@bizjournals.com.
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