Law Firms: Layoffs a Possibility
Although the legal market is still strong and many major firms reportedly are competing hard for desired associates, some see a potential storm cloud on the horizon.
The stock market gyrations following the subprime mortgage meltdown are creating a credit crunch that makes it more difficult to finance corporate transactions. Depending on how severe this lack of financing becomes, it could significantly reduce legal business in certain practice areas. And, if so, law firms may have to let some associates go, reports New York Lawyer (reg. req.), reprinting a Legal Intelligencer article.
“Future layoffs are a realistic possibility and they would come in the areas of corporate finance and real estate,” says Sheldon Bonovitz, chairman of Philadelphia-based Duane Morris. The hardest-hit practice areas, he says, are those focusing on financings, securitizations and leveraged buyouts.
However, other practice areas, such as bankruptcy, employment and litigation, should pick up in a downturn, Bonovitz points out. Meanwhile, energy, health care and intellectual property practices wouldn’t be affected, he predicts.
Mark Jungers, a legal recruiter at Major Lindsey & Africa’s office in Chicago, confirms that some firms have been talking about the possibility of layoffs. However, there is still a shortage of corporate associates and transactional practices are busy right now.
“There’s a cloud off in the distance,” he says. “Maybe it’s going to rain on us, maybe not.”