Morgan Lewis lays off lawyers, staff
In yet another sign of the broad retrenchment under way in the American legal industry, Center City's Morgan Lewis & Bockius L.L.P. said yesterday that it had let go 55 lawyers and 161 other staff members in its U.S. offices.
In yet another sign of the broad retrenchment under way in the American legal industry, Center City's Morgan Lewis & Bockius L.L.P. said yesterday that it had let go 55 lawyers and 161 other staff members in its U.S. offices.
The firm said it also would delay the start date for its incoming first-year lawyers to October 2010, but would offer stipends of $5,000 a month to those who found jobs with public-interest organizations.
In videoconference presentations to lawyers and staff this year, chairman Francis Milone said Morgan Lewis had concluded that layoffs were not needed. But yesterday, in an e-mail to the firm's 1,500 lawyers and hundreds of other staff members, he said cutbacks had become unavoidable.
"Unfortunately, we have reached the point where we believe that the greatest good for the greatest number of our colleagues will be achieved by eliminating some positions and bringing our overall numbers more in line with the realities of the present economic environment," he said.
The firm, one of the nation's largest, has 314 lawyers and 306 staff members in Philadelphia. It declined to say what offices had been most heavily hit by the layoffs.
Milone said he will explain the reasons for the cutbacks in greater detail in a firm-wide videoconference today.
On a percentage basis, the cutbacks at Morgan Lewis are more modest than those at other big law firms around the country recently. The lawyers who lost their jobs yesterday account for about 3.5 percent of all lawyers at the firm; Latham & Watkins, the third-largest firm in the country, let go about 6 percent of its lawyers two weeks ago.
Even so, the news is likely to draw wide attention in the legal world, suggesting as it does that the wrenching downsizing among big law firms is far from over.
"We are continuing to see more and more layoffs as the economic situation worsens," said Bill Brennan, an adviser with the national legal consulting firm Altman Weil, based in Newtown Square. "This is always a difficult decision, but in order to save the business, you can only defer so long."
Big law firms with high costs have been under heavy financial pressure. The collapse on Wall Street and the seizing up of financial markets have shut off lucrative sources of work: mergers and acquisitions and the packaging of securities for investors that helped fuel a law-firm boom for several years.
Morgan Lewis, which has a large New York office, is grappling with a falloff in revenue from those practice areas, although it has other areas, such as energy and employment law, that have held up well.
But the financial problems facing law firms go well beyond one or two struggling departments. Corporate legal departments are putting pressure on their outside law firms to lower costs through lower hourly charges or flat rates.
Milone hinted at that in his statement, telling employees that the firm's success "will require us to keep our expenses and personnel numbers in line with our clients' expectations."
By delaying the start date to October 2010, the firm will go without freshman lawyers this year. Eric Kraeutler, Morgan Lewis' firm-wide hiring partner, said yesterday that next year's freshman class likely would be given a delayed starting date as well.
First-year associates at Morgan Lewis typically start with a salary of $145,000 in Philadelphia. By delaying this year's entry-level lawyers and providing a monthly stipend, the firm will cut its costs by about $85,000 per lawyer in Philadelphia and more in cities where entry-level lawyers have higher salaries. Law firms typically earn little, if anything, from entry-level lawyers.
