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In-House Is No Haven


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The layoffs are less visible and harder to tally than the widely publicized firings at major law firms, but their impact is no less real. On Wall Street alone, hundreds of lawyers’ jobs have disappeared. Some will never come back.

By far the hardest-hit sectors are financial ser­vices and real estate, but no industry is immune to a downturn that many economists say may be more than a cyclical dip. They suggest the economy is restructuring on a longer-term path of slower growth.

Microsoft CEO Steve Ballmer cited a “once-in-a-lifetime set of economic conditions” when the Redmond, Wash.-based company announced plans in January to eliminate as many as 5,000 positions over 18 months, the company’s first major cuts. A source close to Micro­soft says the cuts are expected to eliminate 50 law department positions, or rough­ly 5 percent of 1,000 legal jobs worldwide, through attrition and layoffs by the end of June.

When Home Depot eliminated 500 headquarters jobs last year, it was widely reported that more than 17 attorneys were among those let go. The Atlanta-based retailer cut an additional 2,000 support staff jobs in Jan­uary.

The company would not say how many legal jobs were lost, but spokeswoman Sarah Molinari says, “The legal function is a key component in supporting our business. We certainly feel we have a legal team in place that meets the needs of our stores.”

On Wall Street, hundreds of in-house legal jobs were swept away by the Bear Stearns March 2008 forced merger with JPMorgan Chase, followed by the Lehman Brothers Chapter 11 bankruptcy and the Merrill Lynch merger with Bank of America just six months later. The three brokerage giants collectively employed 1,000 to 1,200 in-house lawyers, and the fallout is ongoing.

At Merrill Lynch, “some landed, many lost their jobs and many are in limbo,” says recruiter Joel Berger, pres­ident and founder of New York City-based Meridian Legal Search. “Some have been told they were being let go in three or four months, and they’re still there.”

On the West Coast, Seattle-based Washington Mutual’s takeover by JPMorgan Chase in Septem­ber affected about 100 in-house attorneys’ jobs. A former WaMu lawyer estimates that more than half eventually will lose their positions. A JPMorgan Chase spokesman declined to provide numbers.

“Staffing levels are being reduced,” says Deb­orah House, vice president and deputy general counsel for the 23,000-member Association of Corporate Counsel. “You have to read behind the numbers. When 2,000 or 3,000 are cut from a large firm, some of those are lawyers.”

The impact is reflected in her group’s membership, widely reported to have fallen 6 percent this year through March after annual increases of 10 percent in recent years.

SHRINKING PAINS

The painful result is fewer opportunities for a growing pool of candidates. Some hang out shingles as consultants. Others head back to law firms, though hiring freezes limit this option. Meanwhile, law firm refugees who set their sights on in-house jobs are more likely than in past years to find disappointment.

“I don’t know anybody who’s expanding,” says James Wilber, principal and senior law department consultant at Newtown, Pa.-based Altman Weil Inc. “The best that’s happening is that some law departments are staving off cuts they otherwise would have to make by bringing more work in-house.”

In a fall Altman Weil survey of general coun­sel at firms with up to $20 billion annual revenue, 65 per­cent of those responding were planning to bring more work in-house in 2009. Yet 31 percent were planning to cut lawyers and administrative staff.

A tough economy cuts two ways, says Michael Anas­tasio, law director and associate general counsel in Sun Microsystems Inc.’s intellectual property law group in Chicago.

“Our role is to offer a lower-cost alternative to out­side counsel, so you’d expect we’d continue to be in demand,” Anastasio says. “The reality is, in a lot of cases, that the pressure to reduce payrolls across the board will overcome that economic factor.”

Maryrose Maness. Photo by Larry Lettera

Lawyers’ salaries also make them more visible targets, adds Rees Morrison of Princeton, N.J., a veteran management consultant to law departments. “They’re vulnerable in part because they’re expensive [relative to other staff], and they’re corporate overhead.”

New York City attorney Maryrose Maness recalls the job market deteriorating last summer when she decided not to relocate with Altria Group, which offered to retain her in a different position at its new headquarters in Richmond, Va. Her job search ended well: She started work as vice president and chief employment counsel at Warner Music Group on Sept. 8, one week before Lehman collapsed.

“I could sense the market shifting,” she says. “The more folks I talked to, the more were starting to put a lot of their positions on hold. They weren’t necessarily in a downsizing mode just yet, but they were holding off on future hiring. In looking back, I’m not sure some of the positions ever really came off of hold.”

Jason Goitia, who was featured in the January ABA Journal story “Situations Wanted,” faced an even tougher market when he lost his job in structured finance at Goldman, Sachs & Co. in St. Petersburg, Fla. Despite his University of Chi­cago law degree and recommendations from top law firms, he had only three face-to-face in­terviews during the year after his layoff in April 2008. He moved in with a cousin in the Washing­ton, D.C., area because he hoped his prospects would be better there.

“The pain isn’t just in finance,” he says. “The pain is widespread. There are attorneys who are closer matches to whatever thin needs there are. While my experience or interests may be valued, they don’t fit within the area that addresses the needs more closely.”

Paulette Peltz, former assistant division counsel at real estate investment trust Vornado/Charles E. Smith, lost her job in late December. The Arlington, Va., attorney has held senior management in-house legal positions for 20 years.

“I’ve never seen a marketplace like this before,” she says. “It’s very bleak. There are weeks I have to stretch to find positions I can even apply for.”

EMPLOYERS’ MARKET

Clement Revetti Jr. Photo by Tim Llewellyn

Employers, meanwhile, enjoy their pick of candidates. Clement Revetti Jr., chief legal officer at Philips Healthcare, based in Andover, Mass., says his in-house recruiting service sends him about twice as many applicants to review as last year. He hired three lawyers in 2008 and plans to hire three more this year at the growing company.

“Clearly the qualifications of the candidates applying seem to be much greater now,” Revetti says. “You see some great candidates, but it’s very difficult to bring somebody with 20 years’ experience in when you’re developing a department where people want to stay and grow. You want to create career paths.”

Recruiter Susan Pye, founder and president of Houston-based Pye Legal Group, recalls helping a client at a large engineering company hire two lawyers 18 months ago.

“It was almost a bidding war” to get them to leave their law firms, she says. “It took five offers to get it done.” This year, the same client convinced his boss that “this is a great time to pick up some really great talent.” His first job offer was accepted.

“You’ve got a situation now where law firms are laying off people,” Pye notes, “and those people are very willing to be real­istic about their base sala­ries.”

Displaced lawyers, meanwhile, are considering nontraditional options. Elaine Reiss, who chairs a com­mittee to help members in transition at the Association of Corporate Counsel’s greater New York chapter, said one member started a business that counsels boards of directors. Another teaches compliance.

Some make themselves attractive to law firms by bringing in business. Meridi­an’s Berger cites a highly compensated New York in-house lawyer whose employer told him that as part of his exit package, “The work you used to send out regularly, we’ll send it to you because we know it’ll be in competent hands.” That package opened the door for him at a large law firm, Berger says.

Warner Music Group’s Maness says aggressive networking months in advance paid off for her. She signed up for speaking engagements on industry panels and partnered with law firms on presentations.

“Most folks stay in their inner circle of comfort,” she says. “I tried to expand my outreach to include anyone in a position of influence. I probably averaged three to four meetings a day.”

Alisa Tazioli, managing director in Seattle for legal recruiter Major, Lindsey & Africa, advises candidates to get creative and stay active in their practice area by consulting, taking on project or pro bono work, writing articles and speaking.

“The reality is,” she says, “some will be out of full employment for a while.”


Barbara Rose is a freelance journalist in Chicago.


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