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Move over, New York -- it's Philadelphia's time in the hot seat. Legal blog Above the Law was abuzz with reports and rumors Monday that two Philadelphia firms saw associate cuts with one of them laying off staff as well. And according to one consultant, the Pennsylvania market could most likely expect to see more attorney cuts in the new year as firms wait out the holiday season.
Wolf Block has laid off 15 associates and staff and Drinker Biddle & Reath let go of somewhere around 20 or fewer attorneys on Friday, according to the blog.
There were rumors late last week that Wolf Block had suggested to some attorneys that they look for other positions. It is unclear if those rumors are directly related to these layoffs.
Drinker Biddle spokesman John Byrne said the firm, as a matter of policy, does not comment on personnel matters.
The news for 300-lawyer Wolf Block comes in a tough year where the firm saw months of merger discussions with Florida-based Akerman Senterfitt end in September over what the firms said were conflict issues. Wolf Block had also decided to delay the start of its first-year associates this fall. When the merger talks ended, firm Chairman Mark Alderman told The Legal Intelligencer the firm wasn't necessarily looking to cut any attorneys but would not as readily fill vacancies.
Alderman did not return a call for comment but a spokesperson for the firm, who wouldn't give the breakdown of associates and staff, told Above the Law the numbers were accurate.
Most of the layoffs seen in the Pennsylvania market have focused on staff cuts, but consultants have said the real savings to the bottom line are in attorney cuts.
Ward Bower of Altman Weil said he thinks firms have already done the staff cuts and the next round of layoffs -- which he said could be expected in the first quarter of 2009 -- will involve attorneys with perhaps some additional staff.
While Pennsylvania has been more insulated than markets like New York, London or California, Bower said it has been long enough for the economic crisis to have spread far enough beyond Wall Street so that everyone is affected in some way by the general slowdown in the economy. Associate layoffs will most likely occur in January and February in part because of performance reviews at the end of calendar fiscal years, Bower said. But the larger reason for the delay, he said, is the holiday season.
Bower said he knows of a few firms that have decided to lay off attorneys but didn't want to do it right before the holidays so they are waiting until after the start of the new year.
He said he didn't think firms were using the performance review period as an excuse to make larger-than-normal cuts. While some of the cuts will be over performance issues, most will be because of the economy, Bower said.
"Firms are not adverse to calling an economic cut by its true name," he said. "That was not the case in 2001, but very clearly now I think that everybody is a lot more honest about these things."
Calling a layoff performance-related when it's not doesn't do anyone any favors, Bower said. It leaves a poor mark on an attorney's resume and might tarnish a relationship between a firm and an attorney who could eventually become corporate counsel for a client or an otherwise helpful alumnus.
There have been a number of layoffs at Pennsylvania firms over the past few months.
Reed Smith laid off 115 staff in the United States this month and said there was the potential to let go another seven staff and 11 business and finance attorneys in its U.K. offices by early 2009. The firm said this round of cuts was due to the economy and an anticipated slowdown in work, whereas its decision to lay off 50 legal secretaries in April was based on the firm's desire to become more in line with a desired attorney-to-secretary ratio.
Buchanan Ingersoll & Rooney cut 25 administrative positions across its office in response to the economy and had said it didn't expect to lay off any attorneys.
Duane Morris cut seven people from its marketing team in August and an additional 15 administrative positions, mainly in the Philadelphia office, from other departments the same week.
Ballard Spahr Andrews & Ingersoll let go of 13 support staff earlier in the year for what Arthur Makadon, the firm's chairman, had said was in part due to the economy.
Intellectual property boutique Synnestvedt & Lechner let seven staff members go a few days after four partners in the firm left for Saul Ewing. The firm has since disbanded, with the bulk of the attorneys joining Fox Rothschild.
Blank Rome saw the departure of nine associates after the firm's annual review period. Dechert initially had given pink slips to 13 associates because of a downturn in the real estate and structured finance practice but later said those associates were offered temporary positions in other practice groups.
