Layoffs to continueat law firms

From the Daily Business Review:

Though more subtle than mass layoffs in the financial and manufacturing industries, the layoff ax hit some attorneys this year at law firms in South Florida as members of support staffs such as paralegals and legal assistants lost their jobs in greater numbers. The cutbacks, analysts warn, are not likely to abate in the new year.

Anyone who thinks law firm layoffs are over should think again, said Bill Brennan, a principal with legal consulting firm Altman Weil. Some law firms have only delayed the inevitable by holding off cuts until the new year. It may seem more charitable, but it ultimately doesn’t help the people on their way out, he said.

“There actually may be a negative impact on the job-seekers who will lose their positions in the first quarter of 2009 because any jobs that may have been available at the end of 2008 will have been taken,” he said. “The unfortunate few lawyers who may get pink slips in the first quarter of 2009 will probably find it very difficult to find new employment. It’s a pretty sad situation.”

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National Law Journal Annual Survey

The National Law Journal's 31st annual survey of the nation's largest law firms found that hiring slowed significantly in 2008.

"At this time last year, we reported that overall growth had picked up to levels not seen since 2001. These days, of course, are a different story. The current economic crisis is hitting law firms hard — seven large law firms announced layoffs this year, and the demise of two major firms on the list, Heller Ehrman and Thelen, will affect approximately 1,200 attorneys. It's not all bad news, at least for some law firms: DLA Piper maintained its spot at the top of the chart and K&L Gates, through a series of successful mergers and lateral hires, has climbed into the top 10 firms."

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Worldwide Bankruptcy Wave About to Hit

Image via WikipediaA recently released report by Paris-based Euler Hermes, the world's largest credit insurer, concludes that Europe and the U.S. will experience a significant increase in business failures in 2009.

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Early Warning Signs of Law Firm Failure : Larry Bodine Law Marketing Blog

Image via WikipediaLarry Bodine Law Marketing Blog: "Failed law firms, like Thelen and Heller Erhman, have three things in common:
* Below average financial performance – often including excessive financial leverage, significant deferred obligations, low productivity, and poor realization;
* Internal dynamics – primarily involving leadership issues, partners with incompatible goals, differences over compensation philosophy, and lack of succession planning; and
* External dynamics – primarily involving competitive pressures related to the firm’s historical client base, access to new clients and desirable work, and inability to recruit key talent.

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Lawyer Accused of Stealing Millions

NYTimes.com: "Federal authorities have been tracking what they describe as a brazen swindle of some of New York’s savviest investors by one of New York’s more accomplished lawyers. Mr. Dreier has been charged with multiple frauds in the United States and a related crime in Canada, and is being held without bail in Manhattan.

In court last week, prosecutors said their count so far put the money missing at $380 million, most of it lost by hedge funds and other investors who had bought promissory notes that were flat-out fictions.

In recent days, Dreier L.L.P., the Park Avenue law firm that Mr. Dreier founded, has been plunged into chaos. At least $35 million in escrow that was to have been held by the firm seems to be missing, the authorities say, and nearly all of its 250 lawyers are now looking for work."

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The Anatomy of Law Firm Failures

Image via WikipediaHildebrandt International : In 2004, Hildebrandt conducted a study of 80 US law firm failures that occurred between 1998 to 2004.

"Looking back on that study – and extending it forward to the firms that have dissolved since 2004 – we believe that the conclusions we reached in our earlier study remain valid and offer helpful guidance for today’s law firm leaders.

In our experience, failed firms typically exhibit one or more major fundamental flaws, and the flaws usually fall into three primary categories:

* Below average financial performance – often including excessive financial leverage, significant deferred obligations, low productivity, and poor realization;
* Internal dynamics – primarily involving leadership issues, partners with incompatible goals, differences over compensation philosophy, and lack of succession planning; and
* External dynamics – primarily involving competitive pressures related to the firm’s historical client base, access to new clients and desirable work, and inability to recruit key talent."

See full article at: The Anatomy of Law Firm Failures
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Myths of Space Utilization

Image via WikipediaNews Detail: "In a recent White Paper titled, “Are the Myths of Space Utilization Costing You More Than You Know,” Jones Lang LaSalle, the leading integrated financial and professional services firm specializing in real estate, reveals that there is oftentimes a significant difference between how much vacancy corporate real estate executives think they have within their portfolios and the actual amount, and how this disparity is costing companies millions.

For its occupancy study, Jones Lang LaSalle examined the portfolios of eight major companies representing a cross-section of industries – technology, consumer products, professional services and financial – as well as its own real estate portfolio. The combined measurement was nearly 42 million gross square feet of corporate office space across the globe in 583 buildings.

Jones Lang LaSalle found that by dividing vacant seats by the total number of seats yielded one of the most significant findings: a 26 percent average actual vacancy rate – 13 percent in reported vacancies and another 13 percent in shadow vacancy (office areas reserved for reasons including new hires). This is in marked contrast to the typical estimations of all vacancy at seven to 10 percent."

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Law Firm Death Watch

Image via WikipediaLaw Firm Failures 2008
Heller Ehrman
Thelan
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Law firm prodictivity down

Image via WikipediaThe West Peer Monitor Index, a measure of legal market conditions, found large law firms had the lowest productivity in the third quarter.

Overall, law firm productivity was down by 4.5 percent overall and 6.5 percent at the 100 largest firms. The report attributes the low productivity level to large firms having too many associates with too little to do.

“In spite of the various reports of layoffs and firm contractions, the factor that looms largest is the swelling of unproductive associates in firms,” the report reads. “This is especially true with the large firm segment, which is experiencing the lowest productivity in the industry.”

Layoffs have become increasingly common at major firms, but staff reductions have lagged behind the falloff in demand for legal services, further pushing down productivity. Still, the legal industry is definitely in downsizing mode.

Associate hiring declined by 6 percent from a year before, and law firms are offering equity partnerships to half as many attorneys as they did the previous year, according to the index. Lateral growth was about the same as in 2007.

On demand for services, billable hours dropped 2.5 percent in the third quarter following a 2 percent decline in the second quarter, according to the index. The drop in billable hours during the third quarter was especially steep in July and August at 5 percent, but demand rebounded in September to bring up the quarterly average.

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US companies to cut legal costs

Image via Wikipedia

About 75 percent of corporate general counsel nationwide indicated that their law departments are facing budget cuts next year, according to a survey by legal industry consultant Altman Weil.

Most of the cuts will be targeted at outside law firms, Newtown Square, Pa.-based Altman Weil said. The average cut will be 11.5 percent.

The survey said 15.6 percent reported that budgets would increase by a smaller percentage in 2009 than in prior years.

Altman Weil conducted the survey of the top lawyers at companies in November and it included responses from 115 attorneys working as general counsel for their firms.

Survey participants said outside counsel costs and the unpredictable nature of legal spending were the top two concerns about 2009.

See article at: http://www.bizjournals.com/sacramento/stories/2008/12/08/daily24.html

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Image via WikipediaAccording to a Government Accountability Office report released on Tuesday, the two law firms have pulled in about $2.8 million combined in fees from work done on the federal government's $700 billion economic rescue plan.

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K&L Gates and Bell Boyd may merge

Image via WikipediaThe merger, to be completed in early 2009, would create a 2,000-lawyer firm. In an interview, K&L Gates Chairman Peter J. Kalis said Bell Boyd was an especially attractive partner because of its well-known investment management and intellectual property practices.

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White & Case to Restructure

Image by miss_blackbutterfly via FlickrUnder a new structure put in place this week, power will shift from 35 individual offices to 14 regional groups, with a renewed focus on 16 different global practices. The moves come in the wake of a four-month review by McKinsey.

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Reed Smith Managing Partner on Layoffs: Capacity Didn't Meet Demand

Citing a "continuing slowdown in the economy," the firm announced on Wednesday the termination of 115 support personnel in its U.S. offices and the elimination of up to seven support staff and 11 associate positions in its London office.

See article on AmLaw at: Reed Smith Managing Partner on Layoffs: Capacity Didn't Meet Demand

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Morning Docket 12.04.08

Legal On Ramp To Aid Laid-off Associates

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Thanks to Patrick Lamb and his site In Search of Perfect Client Service for pointing this one out. Paul Lippe at Legal On Ramp (legal social networking platform) is opening up the site to assist attorneys who have become the victims of the economic downturn:

At Legal OnRamp, we're concerned about the recent layoffs of associates in large firms, but also optimistic that this will give those lawyers an opportunity to adapt to the world that's emerging. As such, even though Legal OnRamp is primarily for inhouse lawyers, we are inviting associates who are being laid off to join. We are putting together a career center with a variety of resources, we have a number of job listings, and will support various networking and skills development activities. We have extended that offer directly to the firms and welcome individuals to contact us as well. Just indicate which firm you are being laid off from when you request an invitation at www.legalonramp.com.

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