The Homa Files

Excerpted from WSJ, “Recession Batters Law Firms”, Triggering Layoffs, Closings, Jan. 26, 2009

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“Law firms are not the kind of companies that do well in adversity”

After upending a succession of U.S. industries, the recession has arrived for U.S. law firms, which have long seen themselves as partially insulated from economic downturns. Profits, on average, were down 8% to 12% across the industry last year, after 15 years of consistent profit growth. Throughout the industry, business has dropped off in such key practice areas as mergers, public offerings, and corporate finance. Litigation, often counted on to carry firms through downturns, has become less profitable as clients increasingly settle big cases, forgo lawsuits altogether, or pressure firms to discount their fees

Pay cuts and layoffs are becoming commonplace …   New York legal giant Cravath, Swaine & Moore announced it was reducing year-end bonuses for junior lawyers, and that it wouldn’t raise its billing rates in 2009 …  Latham , one of the nation’s highest-grossing firms, said that associates would not get raises in 2009 — a move followed by many other firms.

The glimmers of hope (for lawyers): Some practice areas, such as bankruptcy, are robust … [and, the new administration is tight with trial lawyers}.

Full article (with an interesting case study):
http://online.wsj.com/article/SB123292954232713979.html?mod=testMod * * * * *

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This entry was posted on January 26, 2009 at 7:59 am and is filed under Financial Crisis, Law & Lawyers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.