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IP firm Townsend and Townsend and Crew laid off 45 staff and 16 lawyers Wednesday.
The firm said it cut associates and a small number of counsel and non-equity partners, equal to 7 percent of the firm's attorneys. The majority of the layoffs came in the San Francisco Bay Area, where the 222-lawyer firm is based, but all seven domestic offices were affected.
Although the recession has hit corporate law firms the hardest, Townsend Chairman James Gilliland said the IP-focused firm has seen a slowdown in the normally more resilient patent litigation and prosecution practices. That's a problem, given the firm's aggressive expansion over the last two years, including a new office in Washington, D.C., he said.
"We waited as long as we reasonably could to see how the first quarter of 2009 finished, and what we've concluded is that there's still a reasonable demand for our services, but the growth we had been building for is not going to occur right now," Gilliland said.
Although patent work has been viewed as more recession-proof than other practices, Townsend isn't the first IP firm to lay off lawyers. National IP firm Fish & Richardson announced in February that it cut 49 lawyers and technologists. Local patent litigation boutique Day Casebeer Madrid & Batchelder axed seven associates and two staff last fall.
"If it means anything, it means that IP firms aren't immune," said Gary Davis, a legal recruiter with Patterson Davis Consulting in San Francisco.
Gilliland said that the firm has seen a 10 percent drop in demand for services so far this year. Clients aren't filing as many patent applications or lawsuits, he said.
"Clients are reluctant to initiate litigation, and if they're on the defense side of a nonpracticing entity, they are really looking at ways to resolve those matters quickly and inexpensively," he said.
Gilliland said the 149-year-old firm hadn't done layoffs before. "This is the first time, and it hurts like hell."
Most laid-off lawyers will get two months' severance pay, a firm spokesman said, though some will get up to three months. Staff severance will vary based on seniority. Those laid off were told individually, Gilliland said.
Revenue in 2008 was up 13 percent, to $164.5 million, at Townsend, but profits per equity partner dipped 4 percent, to $705,000. Gilliland said the cuts were not meant to boost profits, which are already lower than most big firms.
"There's nothing more demoralizing to a group of highly talented and highly motivated people than to be less than fully occupied," he said. "It's not about profits, it's about the health of the organization."
