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2009’s Toll: More Than 10,000 Law Firm Layoffs and Lower Pay Trend

Posted May 28, 2009 9:43 AM CST
By Debra Cassens Weiss

The pace of law firm layoffs may be slowing, but the numbers continue to grow, hitting more than 10,000 this month for the year of 2009 alone.

At the end of last week, 3,881 lawyers and 6,282 staffers had been laid off since the beginning of the year by major U.S. law firms, the blog Law Shucks reported.

While layoffs are slowing, another trend appears to be gaining steam. Several law firms are cutting associate pay, including Reed Smith, DLA Piper, Sonnenschein Nath & Rosenthal, Nixon Peabody and Seyfarth Shaw.

Lower pay for lawyers could be a lasting effect of the recession, according to recruiter Jerome Kowalski of Kowalski & Associates. "These meganumbers in terms of compensation are just going to disappear," he told the Legal Intelligencer last week.

The good news is the slower pace of layoffs. Last week Law Shucks was prepared to proclaim the first week had passed since the end of 2008 without any U.S. law firm layoffs—until Ropes & Gray confirmed it is letting go a group of associates estimated by legal tabloids to be about 30 in number. The firm said the lawyers were fired as part of the review process rather than economic reasons, but Law Shucks includes the number in its layoff tally.

As of last week, by Law Shucks’ count, more than 338 lawyers, 787 staffers had been let go in May alone, catching up with April layoffs. The numbers are relatively small compared to March, when nearly 3,500 lawyers and staffers were laid off from law firms.

Law firms laying off lawyers this month included:

• DLA Piper, cutting 24 lawyers and 100 staffers in the United Kingdom.

• Hunton & Williams, cutting 23 lawyers and 64 staffers.

• Fish & Richardson, cutting 35 lawyers and 85 staffers.

• Day Pitney, cutting 20 lawyers.

• Snell & Wilmer, cutting 30 to 40 staffers.

• Thompson & Knight, cutting 17 lawyers and 25 staffers.

• Fenwick & West, cutting 15 lawyers and seven staffers.

• Fennemore Craig, laying off 10 staffers.

• Seyfarth Shaw, cutting a total of 50 lawyers and staff.

• Milbank Tweed Hadley & McCloy, cutting 49 associates and 40 staffers.

• Eckert Seamans Cherin & Mellott, cutting 119 temporary lawyers.

The 10,000 layoff milestone for lawyers and legal staffers has been hit twice this year.

In April, Law Shucks reported that more than 10,000 lawyers and legal staffers had been laid off from major law firms in the last 15 months. Then, on May 15 the blog said the 10K mark had been hit in a shorter time period—in the year 2009 alone.

Related coverage:

ABAJournal.com: “After Early March Mayhem, Law Firm Layoffs Slow: Month’s Total Nears 3,500”

ABAJournal.com: “February Free Fall: Major Law Firms Lay Off Another 2,000-Plus Attorneys and Staff”

ABAJournal.com: “January’s Carnage: 1,487 Law Layoffs”

Comments

1.

B. McLeod
May 28, 2009 10:47 AM CST

Taking into account that the tally we see is really limited to large firm castaways, it is likely that, profession-wide, there would be well over ten thousand lawyers unemployed since September 2008.  As we know from prior coverage on this site, the tally includes many thousands of large firm castaways who would have been recruited from top schools, and many of whom would also have had some practice in sophisticated transactional, tax and finance work.  There has to be an appreciable level of mental capacity and professional potential in this group, to the extent that if they were to organize for mutual aid purposes, they could probably figure out how to make some progress on common problems.  Perhaps they could check into creating a 501(c) to receive contributions to provide various types of emergency relief for unemployed lawyers.  Or, even organize an ABA Unemployed Lawyers Section.  While members of the general public are not likely to be very supportive of relief efforts for unemployed lawyers, I would think members of the profession (and the ABA and state and local bar associations) would.

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2.

George Patsourakos
May 28, 2009 1:19 PM CST

It is incredible that law firms have laid off more than 10,000 of their employees for the year 2009 alone. Lawyers who have been laid off have various options. They can open their own law firm. They can teach a course or two at a law school. They can even teach courses at the undergraduate level. including American constitutional law, school law, and business law.

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3.

V.A. Carney
May 29, 2009 7:28 AM CST

Well, wotta surprise!  Biglaw bought into a flawed business model that would only be fully revealed in an economic downturn.  With 70% of revenues going to directly to operating overhead, too much pressure was put upon hourly rates, effectively eliminating discounts, value-billing, capped fees, fixed fees, and similar adjustments.  $700 per hour became the partners’ baseline, and guess what happens when clients don’t want to - or cannot - pay those rates?

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4.

MrHappy
May 29, 2009 7:32 AM CST

The problem isn’t going to be solved simply by laying off employees.  The reason this is happening is because clients are starting to recognize that paying $400 an hour for some 24 year old kid to search WESTLAW isn’t worth the money.  Big firms will continue to decline because smaller, more client responsive practices almost always provide better service at a more affordable rate.  Clients are figuring that out and they won’t be coming back to big law for their legal needs when this recession is over. 

This is the beginning of the end for large law firms that have been overcharging for their services for years.

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5.

None Shall Pass
May 29, 2009 7:35 AM CST

Funny…I don’t see any mention in there of cutting partner pay.

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6.

Treble
May 29, 2009 7:48 AM CST

MrHappy - I hope you are not suggesting that associates reap all $400/hour.  Ridiculous overhead and outrageous partner salaries need to be fueled by something, and that’s associate pay.  Yea, associates probably make too much from the start, but shaving 20K off each associate’s salary is not going to close the gap.
And don’t knock Westlaw research and memo-writing - in case you haven’t practiced in a while, that’s what lawyers do!  It’s what separates us from acountants, businessmen, and other white-collar professionals.

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7.

Older Guy
May 29, 2009 7:53 AM CST

After all of this bloodletting who will be left? Unquestionable geniuses, successfull hucksters, people who need no sleep, and grade 1 butt-kissers?

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8.

tom
May 29, 2009 8:21 AM CST

#6 - you don’t need to be an American lawyer to you use westlaw and write a memo on what the law says.  That is a job that can easily be outsourced to India for $10 an hour.

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9.

Contented
May 29, 2009 8:40 AM CST

Remember, law practice as we know it today has really only been around since the 60s and 70s. Like many other disciplines (banking) it will ebb and flow in a natural way to create the most efficiency. The current model had its day and we now know that the practice will need to evolve. I have my own virtual practice and cannot speak for everyone, but I think there is much better days ahead for lawyers (especially young ones). Let’s face it, for most of us, this prof has been nothing but dissappointing. Boring mindless work, long hours, immature offices and petty politics. The only thing we look forward to is ordering crap online during the day, because spending is our only jusitification. So, good, let this model fail and in its place, hopefully, will be a more human friendly work model - yes, in case it was missed upon any of you - money is not all that!

Stay optimistic!

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10.

Big Law Deferred First Year
May 29, 2009 8:45 AM CST

#8 - the VERY last thing America needs is more outsourced jobs. That’s why customer service on most cell phone and computer companies is the crappiest its ever been - people who don’t speak English, taking jobs that US citizens need. There are already over 10K lawyers out of work from this year alone - that’s not counting medium and small law or other industries.

Why on God’s green Earth would we want to send MORE jobs overseas? What kind of crazy suggestion is that?

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11.

Walked away from Big Law
May 29, 2009 9:29 AM CST

I feel bad for the attorneys being laid off.  Sometimes, you get sucked into a job because of the huge loans that you’re saddled with at the conclusion of law school.  That said, a while ago, I walked away from Big Law because I wasn’t happy with my lifestyle.  In the end, whether these people are there now, there has to a “come to Jesus” moment, when the questions of “what am I doing” must be decided.  I suspect that most of the lawyers in practice today would readily admit that the treadmill they’re on is unsatisfying, to say the least.  I wish them all good luck and Godspeed.

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12.

fed up
May 29, 2009 11:42 AM CST

#10, agreed, but the current model is unsutainable.  That said, $10 an hour to India (or China) seems low.  Maybe $25 an hour.

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13.

jackpot
May 29, 2009 11:58 AM CST

#8, Probably true, but who wants a legal opinion written in broken English.  When was the last time you dealt with an outsourced call center rep and were actually happy with the results.

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14.

K C
May 29, 2009 12:28 PM CST

Dear # 10, that is not a suggestion, it’s reality.  Before law school I worked for an outsourcing company that did document review for the Microsoft antitrust case.  While doc review is not legal research, there are now outsourcing companies in India with a staff of lawyers who do legal research—there was an NYT article profiling one of them a few months ago.  This is part of the problem for US lawyers—more and more of our tasks can be outsourced, so less of us are needed, while law school enrollment increases.  It’s kind of a problem for those of us who have not yet accrued years of experience and a book of business.

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15.

Charles W. Skinner
May 29, 2009 2:40 PM CST

Re: Comments #8,10,12-14:

I haven’t figured out why some enterprising young, tech savvy firm hasn’t yet invested in hiring about 10 secretaries at $10/hour and leased a couple of the high-speed Toshiba Copiers, and a bank of hard-drives, and turned document review into a thing of the past.

In a past life, I worked for a title search firm, and they had converted their entire operation to go “paperless.” 

The same thing could be done relatively easily with document review.  Scan it, run it through an Optical Character Recognition program, and you’re going to be able to search it in a fraction of the time it would take for somebody to actually READ the documents.

It does make the assumption that you have a pretty good idea of what you’re looking for when you start, but honestly, if you don’t know what you’re looking for when you started, you shouldn’t have taken the case in the first place.

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16.

B. McLeod
May 29, 2009 3:46 PM CST

Seems like there was an article on automated search limitations in the Journal just within the last couple of months.  The upshot of it was, studies show that even after years working on search methods, automated searches miss a lot of relevant (and when screening for privilege) a lot of privileged documents.  This remains true even when multiple search methods are combined (although that reduces missed documents).  So, it is basically an unresolved technological limitation that is keeping contract document reviewers employed.  For now.

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17.

Kalifornia Arnold
May 30, 2009 11:20 AM CST

The problem with the results of outsourced legal material done by people in India is that their products must be Cal-cutta and paste(d) to meet US legal standards. Oh, well, guess you could say—Bomb-bay(s) away regarding keeping legal jobs in the US.

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18.

starving attorney
May 30, 2009 4:42 PM CST

#15 Have you ever been in a doc review?  They are already utilizing the type of program you described.  Unfortunately the program does not take the place of the of an actual person reading over the review.  You cannot rely on search parameters even with the best programs.

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19.

Steve
Jun 1, 2009 9:53 AM CST

I have clients of all professional walks that outsource all kinds of work to India.  The documents that come back is A work.  To those of you who think that India can’t do legal research at $10 an hour, you are kidding yourself.

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20.

Alicia
Jun 2, 2009 11:07 PM CST

Funny, I was laid off from my dream job in september 07. . .I took the severance and option payout and opened an adventure company in Maui! Why don’t you all come here and play with me. LOL

Maybe someday I will move to India and contribute. I would probably really get a lot out of the experience.

I know all of this has no relevance, BUT we need a very good shake down of the legal community. The fact that a patent law associate can pull down 160K in the first year is insane. That is a lot of money.

Yes, the partners are keeping there jobs. . .maybe not salaries, BUT they have seniority.

Why don’t all the laid-off lawyers start a practice together?? Why not? they have BIG LAW experience and can pass a bar exam in any state except CA. LOL

Band together and create something meaningful.

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21.

alicia
Jun 2, 2009 11:09 PM CST

sorry, bad grammar. . .typing fast.

Partners are keeping “their” jobs!

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