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McDermott Lays Off 60 Lawyers and 89 Staff Members

Posted Feb 3, 2009 12:13 PM CST
By Martha Neil

Because of economic conditions, McDermott Will & Emery laid off 60 lawyers and 89 staff members today.

In an internal memo to all personnel today, firm chairman Harvey Freishtat confirmed the layoffs and said the decision to make them had been "tremendously difficult," according to Above the Law, which posts the full text of the memo.

"Our firm performed well in 2008 and remains strong as we move into 2009. However, we are not immune to the continued deterioration in market conditions," Freishtat writes. "The business of our clients has slowed and this has affected our own levels of activity, particularly in the transactional area."

The firm's revenue fell by 1.2 percent last year, although average profits per partner remained the same, reports the Lawyer.

"The cut represents about 5 percent of the firm's 1,100 lawyers in 15 offices," reports the Chicago Tribune.

Earlier ABAJournal.com coverage:

How McDermott Tackled its Leverage Problem

McDermott Leases Heller’s Silicon Valley Offices, Plans Expansion

Updated at 2:20 p.m. to include information from subsequent Chicago Tribune article.

Comments

1.

B. McLeod
Feb 3, 2009 12:26 PM CST

A rolling start on the February “carnage.”

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2.

Ron
Feb 3, 2009 7:29 PM CST

My friend was one of those 60 attorneys.  His response? A two-week vacation, then look for a job.  While shocked and upset, he was also fairly good with his money, so he could go into next year before needing to work again.  He was one of those who made big law work for him.  Would be nice if more were that way.

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3.

B. McLeod
Feb 3, 2009 9:30 PM CST

Exactly.  Good reserves are even better than a “book of business” (and people who go to play in Big Law truly need one or the other).

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4.

Graduating Night Student
Feb 6, 2009 7:15 AM CST

I’m in consulting, and the same thing has been happening.  Depending on your line of service and industry alignment, it’s been worse than others.

All of us are crazy to not save just in case we need to be out of work for a while.  The severance that folks are getting isn’t that great, maybe 6-8 weeks, and that could evaporate too.

I’ve been going to law school at night and graduate this year.  Picked a pretty horrible year to finish, didn’t I?  I’ll be hanging on in consulting, but I’m really wondering what my job prospects are going to be—I didn’t pay all that tuition to not practice, after all.

Any tips for those of us who will be graduating this year, specifically if we have a lot of business experience?

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5.

Graduating Night Student
Feb 6, 2009 7:15 AM CST

I’m in consulting, and the same thing has been happening.  Depending on your line of service and industry alignment, it’s been worse than others.

All of us are crazy to not save just in case we need to be out of work for a while.  The severance that folks are getting isn’t that great, maybe 6-8 weeks, and that could evaporate too.

I’ve been going to law school at night and graduate this year.  Picked a pretty horrible year to finish, didn’t I?  I’ll be hanging on in consulting, but I’m really wondering what my job prospects are going to be—I didn’t pay all that tuition to not practice, after all.

Any tips for those of us who will be graduating this year, specifically if we have a lot of business experience?  (Other than “wait”)

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6.

A law critic
Feb 6, 2009 7:31 AM CST

Although the apparent reason firms are laying off lawyers is that income is way down, the real reason is that those with the power in the firms are unwilling to give up some of their already ridiculously high income to carry the others—the ones who made them ridiculously rich in good times—through the bad times.  In a word:  greed.  It’s not unique to bankers.

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7.

Emily
Feb 6, 2009 8:22 AM CST

When these sorts of layoffs happen, is there a certain level of attorney that is more often laid off, or is it spread around?  (Young associates, senior associates, partners, etc.?)

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8.

Mark B. Weinberg
Feb 6, 2009 8:27 AM CST

I’m shocked to learn there is gambling going on at Rick’s!!!

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9.

Ron
Feb 6, 2009 8:37 AM CST

My friend (one of those 60, see #2) says severance is through April 30.  We graduated in 2005, so we’re mid-level.  I don’t know about the rest of the range let go.

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10.

B. McLeod
Feb 6, 2009 9:19 AM CST

Emily, it is most often “non-revenue associates,” meaning those (usually newer) who have not developed clients of their own.  Within this group, the ones working in busy practice areas fare better then the ones working practice areas where business is dwindling.

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11.

Rocco
Feb 6, 2009 9:22 AM CST

“Our firm performed well in 2008 and remains strong as we move into 2009.”  Yet, we will still give these people the ax so we can more money to line our own pockets and pay our senior partners that absurd bonus they don’t observe.

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12.

Sue
Feb 6, 2009 9:49 AM CST

“The firm’s revenue fell by 1.2 percent last year, although average profits per partner remained the same”

Do you think those partners can sleep at night knowing that they kept their profits level while laying off people who have families to support?

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13.

Bird Smack
Feb 6, 2009 9:57 AM CST

I’ll say it again - I’m not Big Law but was.  I left for reasons having nothing to do with Big Law per se.  I am neither defender nor critic.  But I have to wonder how many of the Big Law critics - McLoud first and foremost - have the knowledge to make some of the critiques they do.  What were the bonuses at McDermott for 2008?  Is that public information?  Does McLoud or Rocco know what senior partners made?  Or are they just talking to talk.  And what is a “non-revenue associate”?  How many associates in a firm like McDermott have their own clients?  None?  Two?  Is it not redundant?  Good, bad or otherwise, McLoud has it all wrong - it is not “most often” “non-revenue associates” that are getting laid off.  Certainly, many of them are.  But “non-revenue partners” and even “revenue partners” are getting burned, too.  Entire practice groups are being cut - from practice-leading partner down the the secretaries.

Emily, sift through the hyberbole.  The economy sucks.  Its hitting so-called Big Law pretty bad - in large measure because Big Industry utilized Big Law.  Its hitting Medium Law, too - see the article on Hinshaw which is by no means Big Law.  Its even hitting smaller law firms and solo practitioners.

The liberal media likes to blame Bush for the country’s economic downturn.  The conservatives have somehow managed to pin the tail on Clinton.  McLoud nad his crowd seem to believe that Big Law is the root of all evil.

Oh yeah, and Big Law is bad!  Bad Big Law, Bad!!!

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14.

A. B.
Feb 6, 2009 10:17 AM CST

Graduating Night Student: I have advice for your situation. Certainly staying in school to ride off the bad economy would not be a bad decision. I would personally recommend that you consider the JD/MBA dual degree program. Hopefully by May 2010 (when you graduate if you decide to go this route) the economy should be recovered/recovering.

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15.

B. McLeod
Feb 6, 2009 11:46 AM CST

Harvey, nothing in my comments above constitutes a “critique” (of Big Law or otherwise).  Please learn to read.

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16.

Adam
Feb 6, 2009 4:01 PM CST

What about other big Chicago firms like Mayer Brown and Sidley? How are they reacting to this news? Do they have their own plans for laying people off?

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17.

sam
Feb 6, 2009 4:29 PM CST

No one will get laid off under Obama.  Obama has promised no more job losses

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18.

George Sly
Feb 6, 2009 7:50 PM CST

The labor statistics came out today, 600,000 Americans lost their jobs last month.  To add insult to injury, NPRs Marketplace ran a story about debt collection being outsourced to India.  This goes with the stories the ABA Journal has run on outsourcing legal work to India.  I don’t care how good you are.  Start watching your back.  It’s going to get a lot worse before it gets better.

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19.

Ellen
Feb 7, 2009 1:00 PM CST

George Sky: To add real insult to injury, a member of the Souith Asia Committee of the American Bar Association is touting legal outsourcing to India! I know that the ABA does not police what its members do, but seriously….

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20.

attorney and consultant
Feb 8, 2009 7:20 PM CST

Graduating night student, graduate this year, pass the bar, and look for a position all while continuing to consult. I wouldn’t add the MBA and hide in graduate school. That’s silly. Depending on your area of expertise with consulting, maybe that will open doors with clients in a quasi-legal type position. Maybe you could go solo and practice law in a niche close to your consulting business and continue to consult. Best of luck

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21.

Skelly
Feb 8, 2009 7:57 PM CST

The only security in the world is having your own business. You are not entitled to anything.

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22.

midwest attorney
Feb 9, 2009 9:18 AM CST

#2, your friend has more sense than most making six figures. The majority of people even attorneys don’t have 3-6 months of living expenses in a money market or a saving account. Being self employed, I keep 1-2 years of expenses in a MMA. One of my neighbors who is a contractor and who for the last 5-10 years has been living well because of real estate commented that this family is living from paycheck to paycheck and he has 0.00 cushion. IHow do you gross 200-250k and not save any money?

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23.

Kalifornia Arnold
Feb 10, 2009 12:58 AM CST

“The business of America is business”—Nothing more, nothing less—lives, children, evictions. hunger all count for nothing. The wealth of the partners over all—if you suffer and die, more room for someone else—compassion? mercy? It was sold yesterday and counted as billable time

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