In the wake of massive layoffs on Wall Street, law firms have been quietly letting go of staffers whose services are no longer needed now that financial deals have dried up. The targeted layoffs that began late last year have turned into a torrent that will likely continue into 2009.
As many as 200 New York-based attorneys from a dozen of the country’s top law firms have lost their jobs in the past year. An even higher number of paralegals, secretaries and other support personnel have also been axed. Some firms are postponing the start dates of new associates in an effort to save money, since their salaries average about $160,000.
“This has not been a great year for law firms,” said Aniello Bianco, senior vice president at legal consulting firm Hildebrandt International. “When you have people who are not busy and you don’t anticipate them becoming busy, law firms have to trim.”
Law firms’ Manhattan offices are feeling a disproportionate impact because of the Wall Street-heavy origins of this economic slowdown.
Last month, for example, Manhattan-based Fried Frank Harris Shriver & Jacobson laid off about 60 administrative employees, or nearly 10 percent of its staff.
London-based Clifford Chance jump-started the layoffs in November when it cut a handful of its New York structured-finance associates. A few weeks later, Manhattan-based Thacher Proffitt & Wood announced it was laying off 24 local associates from the same group.
Manhattan’s Cadwalader Wickersham & Taft let go of 35 lawyers at the beginning of the year and eliminated dozens more over the following few months, ultimately shedding 131 of its 720 attorneys. Thelen Reid Brown Raysman & Steiner followed suit, dropping 26 associates and 85 staffers. The New York office was hit the hardest because it housed much of the firm’s litigation, construction and finance practices.
Some firms are delaying new hires’ start dates in order to save money on salaries. WolfBlock told its incoming class of associates that instead of starting this week, they should report for work in November. To discourage them from seeking employment elsewhere, the firm is paying them a modest stipend of $2,500 per month.
The magnitude of the economic slowdown caught many firms’ managing partners by surprise.
“We just didn’t anticipate that things would spiral down to the extent that they have,” said Frank Burch, joint chief executive of DLA Piper.
“I don’t think you’re going to see a lot of aggressive expansion of legal professionals anytime in the near future,” he added, “though there will be a small number of smart firms that will get the timing right.”
To that end, firms whose success is not tied to high finance are cherry-picking talent that competitors are losing. Burch, for one, just hired eight partners away from Thelen Reid last week, including the real estate department chair.
“New York is the most competitive legal market in the world,” said Jack Zaremski, president of legal recruiting firm Hanover Legal. “For a law firm, either you’re swimming well or you’re sinking.”
There are job opportunities for laid-off attorneys willing to relocate, said Margie Grossberg, a partner at legal staffing firm Major Lindsey & Africa and co-leader of the firm’s associate practice.
“If people are willing to go to other cities, plenty of law firms are happy to talk to lawyers with New York ‘Big Law’ experience,” she said.
Attorney Eric Storz was among the lucky ones.
One of the batch of first-year associates laid off from Thelen Reid in March, the former CPA spent four months job hunting, eventually landing a job at the New York office of Sullivan & Worcester. The midsize Boston firm was not battered by the credit crisis.
When Storz first started looking several months ago, the landscape seemed bleak.
“I was able to garner interviews because I had past experience as a CPA,” he said. “But I’ve heard other people have had a harder time.”
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