Law Firm Leverage Could Determine Which Associates Get the Ax
Small or medium-size law firms that focus on structured finance and mergers and acquisitions are hardest hit by the credit crisis.
And associates could also take a hit if these kinds of firms don’t have enough of a capital cushion to weather the crisis, a legal recruiter told the New York Sun. “Demand for their work is softening, and if their firm isn’t well-leveraged, they may not be able to stay on board,” said Danice Kowalczyk, a managing director at BCG Attorney Search.
Firms that have managed to avoid layoffs, despite the downturn, include Goodwin Procter, which is seeing less M&A work; WilmerHale, which reports declines in IPO work; and Reed Smith, which is doing less property finance work, the story says.
Joel Henning, the senior vice president of legal consulting firm Hildebrandt International, said law firms are reluctant to cut associates now because they know recruiting will be difficult when the market recovers.
“Law firms learned their lesson: They tried cutting younger associates in 2001 and ended up paying a high price when things were improving,” he told the Sun.
A hat tip to Legal Blog Watch, which posted the story.