Black Thursday slammed the legal world on Feb. 12, when six firms nationwide dismissed more than 700 staffers and attorneys — a nerve-wracking all-time high for legal layoffs in a single day.
The next day, on a very unlucky Friday the 13th, another 400 legal jobs nationwide were cut.
Ruden McClosky partner Terry Russell, a former Florida Bar president, is grateful his 185-lawyer firm with 11 Florida offices and another in Caracas, Venezuela, has so far managed to ride out the recession in shades of gray.
But he’s worried.
“It’s very tough. We haven’t had to do massive layoffs, at least not yet. But I’m not sure it’s over,” said Russell, who said his full-service firm is weathering declining revenue and has had to lay off “15 or so staff people and a couple of lawyers.”
“My strong sense is this hasn’t hit bottom yet. One thing I know we are trying to do here at this firm is to spread this out among everyone, to the extent possible, so everyone can keep their jobs,” said Russell.
Employees have been asked to make sacrifices, trim expenses, and do more than what is detailed in their job descriptions.
“We are trying to get everything done that needs to be done and do it less expensively,” said Russell. “The more efficient we are, the more we can employ.”
The mood at his Ft. Lauderdale office?
“I don’t see despair. I see serious focus.”
Despair is reserved for those lawyers who were making good money and suddenly found themselves out of a job.
“About six months ago, I started getting asked a question which I’d never heard in 15 years,” said Michael Cohen, executive director of Florida Lawyers Assistance, Inc.
“And that question we now get about every 10 days is: ‘I’ve gotten laid off. I’m losing my house. If I file for bankruptcy, will the Bar act against me?’
“They are afraid going bankrupt will have repercussions with their law license. And the answer is: ‘Absolutely not — unless there’s some attempt to defraud creditors,’” said Cohen, at the nonprofit organization designed to help lawyers confidentially with substance abuse and mental health issues.
“We’re getting a lot more showing up in our mental health groups,” said Cohen. “When you have to tell your family you have to move out of the house or pull your kid out of private school, there’s no way not to feel like a failure.”
But FLA is not seeing an increase in problems with alcohol or substance abuse.
Cohen’s main advice: If you’ve been laid off and feel depressed, don’t be afraid to get professional help. (FLA’s confidential hotline is 800-282-8981.)
As of March 6, according to Lawshucks.com’s “layoff tracker,” there have been 7,241 layoffs in the legal industry since Jan. 1, 2008: 3,045 lawyers and 4,196 staff.
Just in calendar year 2009, there have been 5,408 layoffs: 2,149 lawyers and 3,259 staff.
The National Law Journal reported in February: “1,100 attorneys lost their jobs at major law firms, which means that the market is choked with highly educated former associates whose severance is running out. . . .”
Behind the numbers are real people wondering what to do next.
Some call The Florida Bar’s Law Office Management Assistance Service looking for advice on hanging out their own shingle and going solo.
“They sound a little shell-shocked,” said Judith Equels, senior practice management advisor at LOMAS.
“Since December, we saw this big upswing in calls. They are saying, ‘I’m starting my own practice.’ Some are coming out and saying, ‘I’ve been laid off.’ Others are saying, “I am going to have to start my own practice.’”
To prevent layoffs, employees have been relegated to part-time workers at the immigration and nationality law offices of Jeffrey Brauwerman in Miami and Ft. Lauderdale. The former U.S. immigration judge said “revenues are down considerably,” and he’s taking efficiencies to a new level to keep his core group of four lawyers (two of counsel on contract) and five staffers.
“We don’t like to lay off, so we have cut hours. The staff is working three days a week,” said Brauwerman. “My core group, we’re like family. I don’t want to cut any more.”
He dropped his Yellow Pages ad and renegotiated his contract with Westlaw. His wife scrutinizes bills carefully.
“Some vendors are making mistakes in their favor. We got a $4,000 refund from the copier people. We’re looking at stuff carefully and making sure we’re not overcharged before the contract is signed,” said Brauwerman.
Because Brauwerman owns his building in Coral Gables, he is able to cut rent on the law office side of the 2,000-square foot building and takes a loss on “the building side of the investment” so the cash flow is higher.
“We are hoping to get through this year and hoping for a recovery next year,” he said.
Brauwerman said he came very close to signing on with a big law firm to be their Miami immigration practice.
“At the last minute, I pulled out because I saw the storm coming,” said Brauwerman. “We saw the handwriting on the wall. And we thought we could be more efficient as a small firm, and be able to turn it on a dime, rather than dealing with a huge main corporate office.”
Back at the big firm, Russell said business is “not as brisk, but adequate.” But he worries the usual risk-takers are not taking risks that would create transactions to drive the economy.
“In prior recessions, there was a flurry of activity,” he said. “People were taking advantage of low prices and willing to take risks to acquire assets cheaply. There’s still a lot of money around, but people aren’t willing to risk it. They don’t even want to risk it on a lawsuit.”
How has the economic crisis changed Russell’s practice?
“Personally, I am working with my clients. I want them to stay clients of the firm and don’t want to run them out the door because they can’t afford the fees,” said Russell said.
“If I can keep them viable, I’ll work with them. Hopefully, some day they will be grateful. I’m walking a fine line. I am willing at this point to work with clients, with whom we see a long-term relationship.”
At Pathman Lewis, a mid-sized Miami firm with 13 lawyers, partner Hal Lewis said his saving grace has been his philosophy to grow “slow and steady,” try to staff appropriately, and use technology to his advantage.
Along with adjusting billing fees to offer partners services at associate rates and have the foresight to beef up litigation last year, Lewis has managed to avoid layoffs.
“I never want to be a firm that hires a bunch of people and then fires a bunch of people,” said Lewis, who does real estate and corporate transactions. “I’d rather be a singles hitter and not go for home runs.”
Two attorneys share one secretary. The office manager serves a secretarial function.
Business is diminished by the crashing real estate market, Lewis said. But, unlike big firms, a mid-sized firm has more flexibility.
“Once a firm bleeds lawyers and lets lawyers go, they’ve got to be careful,” said Lewis. “It hurts the firm’s reputation.
“As a smaller firm, we could be more flexible in billing arrangements. Some firms are charging $700 an hour. And that’s not something clients are willing to do anymore.”
Lewis said he’s willing to work with clients on a blended rate: charge a flat rate for the lawyer working on the file and reduce the hourly rate.
He expects his staff to be versed in technology, what he calls “a good, one-time investment” that closes the gap between big and small firms. And Lewis said he and his partner “know every penny that goes in and goes out” of their 25-person business.
“I talk to the bookkeeper daily. We’re very hands-on. It’s a tough time and we’re not optimistic, we’re realistic,” said Lewis. “We are expecting a difficult 2009 and we’ve laid the groundwork to get through this if we stick together and stick to our solid core.
“If you’re running a firm right now and you’re not worried about what’s happening out there with the economy, you’ve got to be crazy.”
— Courtesy Florida Bar News