Major Law Firms Are Shrinking

One of the interesting aspects of the current recession is the blood bath occurring at many major law firms - enterprises once viewed as largely recession proof. Of course, as large numbers of lawyers find themselves suddenly unemployed, they either find positions at smaller firms or exit the legal industry. That's not to say the malaise of the economic times aren't likewise trickling down towards smaller firms as well. One local divorce attorney said that even in that realm of practice business has slowed as couples are staying together - not necessarily happily - so as to not have to sell homes in a stagnant market. Foreclosure and bankruptcy firms are the only ones that seem to be prospering. The New York Times has a piece today that looks at the turmoil at a firm that has long been a bastion of power and influence in New York:

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In his two years as chairman of White & Case, the venerable Wall Street law firm, Mr. Verrier had already laid off 70 young lawyers and shuttered offices in Bangkok, Dresden and Milan. He had watched top partners flee to competitors and suffered a depressive 2008 holiday party. . .

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Now Mr. Verrier, who had worked exclusively at the century-old firm since leaving Harvard Law School in 1982, sat in his office high above 44th Street and Avenue of the Americas, considering the e-mail message he was about to send. It announced that 200 more lawyers would lose their jobs, nearly 1 in 10 at the firm over all — and not just young associates with everything in front of them, but some million-dollar-a-year ones like himself, the ones with twin mortgages, kids in private school and no Plan B.

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“People are shellshocked,” said one top partner at the firm who, like many of its current and former lawyers, spoke on condition of anonymity for fear of retribution. “If they survived the first two rounds, they’re happy to have a job, but are still very nervous. And if their phones don’t ring, if their work doesn’t come back with a vengeance, they fear they aren’t long for this world.”

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A few top firms, like Thatcher, Proffitt & Wood, established before the Civil War broke out, have already gone under in the flood; the carnage of layoffs has touched even sterling names like Proskauer Rose, Dewey & LeBoeuf and Clifford Chance.

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In the first quarter of 2009, demand for legal services in New York decreased by nearly 10 percent over 2008, according to the Hildebrandt International Peer Monitor Index. At least 10,000 employees at major firms across the country have lost their jobs so far this year, according to the macabre but wildly popular “Layoff Tracker” run by another blog, lawshucks.com.

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While the legal industry is hardly battling the existential threat that is facing, say, the newspaper trade, Big Law — especially in competitive New York — is facing a potential paradigm shift as fundamental as the one that has hit investment banks and the auto industry. Big, as a business model (let alone as an expression of the national mood), seems bound for obsolescence.

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Jerry Kowalski, a legal consultant who tracks the New York market, said that “the mood at White & Case — and at probably 15 or 20 more firms in New York — is kind of like sitting at a deathbed and watching a close relative wither away. It’s like you’re right there in the I.C.U. with the patient and you know that the condition is terminal.”

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“For the first time in their lives, people feel sort of useless. All of a sudden, you can go to lunch for two and a half hours and really not be missed. It’s a blow to the ego. You’re talking about people who have never really failed.” At White & Case, the tensions have become so fierce that some people now fear staying home even if they are sick. Market forces have replaced “the social contract,” a top partner there said: camaraderie is “not terribly strong,” because “people are very scared.”

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As a profession, the law is harsh and brutal - one therapist I spoke with recently affiliated with the Virginia Bar noted that attorneys have among the highest suicide rate of any profession. After 32 years in the profession, I understand why. My advise to would be lawyers? Think twice about the law as a career. And for those who are already in the industry - find a way to get out, if possible.