Share Tweet

Lawyer Layoffs Launched

Except when you get in trouble and need one, a favorite American pastime is to condemn and ridicule lawyers.  Not only have we witnessed a cancerous proliferation of lawyers in our nation, now over 1.1 million, but for a long time all we have heard is how much incredible money most lawyers make.  Setting aside public interest lawyers working for the public good, before the economic downturn lawyers fresh out of law school could easily get $150,000 annual starting salaries as associates.  Partners in big name firms could make millions a year.

When we also feel anger about government, politicians and lobbyists we know that most of the corrupt, power hungry and largely incompetent elites are lawyers.  So now, as so many millions of ordinary Americans are suffering extreme pain and anxiety because of the economic meltdown, we may feel a little joy because many lawyers are losing their jobs, assuming none are family members or friends.

The US has so many lawyers because the legal services sector generates about $135 billion a year nationally, until now anyway, which represent about 1 percent of the gross domestic product.  From 2004 to 2007, the latest year for which government data are available, spending in the profession grew annually from 6.1 percent to 7.7 percent.  Meanwhile the GDP as a whole grew only by about 3 percent annually during that time.

Stories are appearing on almost a daily basis about financial difficulties and layoffs at top law firms nationwide.  At K&L Gates; Morgan Lewis & Bockius; and White & Case a total of 731 attorneys and staff have lost their jobs.  Akin Gump Strauss Hauer & Feld  cut 47 associates and 57 staff, and King & Spalding dropped 37 attorneys and 85 staff.  Latham & Watkins trimmed its headcount by 190 attorneys and 250 staffers, and Orrick, Herrington & Sutcliffe laid off 100 attorneys and 200 staff.  O'Melveny & Myers let go of 90 attorneys and 110 staffers.  Over a 10-day period from February 27 through March 9, 2009 the total number of layoffs at well-known partnerships was close to 2,500.  Sure, that's hardly anything compared to the tens of thousands losing their jobs from well known companies.  But for the legal sector it is big, bad news, a virtual wipe-out tsunami that besides hitting attorneys is also devastating lower paid staff.  And it will likely get worse.

From boom to bleak times is the theme of a Boston Globe an article that wrote about Paul Semenza, a lawyer for 25 years that cannot find a job in his chosen profession.  He now sells sofas and mattresses in a furniture outlet.  But, unlike untold number of other Americans, at least he has a job.  The story noted: "The downturn marks an entrance into uncharted territory for one of Boston's marquee industries.  For years, major law firms consistently reported higher annual revenue and profits and vied with Wall Street for Ivy League law school graduates…  And firms had little trouble passing along the cost to clients, who needed lawyers to help handle a growing number of mergers and other key business deals.  That's all changed, as demand has slowed and clients look for ways to slash their legal bills."

The point for the rest of us is that high costs for lawyers drove up the costs for all kinds of products and services.  Indeed, much of the public negativity about lawyers connects to our perception that we have all paid a high price for high priced lawyers.  We know in our hearts that lawyers wrote the laws and regulations at every level of government that created mountains of work for other lawyers.  Lawyers like litigation and confrontation because it makes money for them.  Lawyers are shysters.  Lawyers make their parents proud and the rest of us angry, and maybe a little envious, at least until now.

Law firms are also pursing other actions to adjust to the new, terrible economic times, including outsourcing some of their work overseas, hiring more temporary or contract lawyers, and shifting from billable hours to fixed fees.  Using lawyers in places like India has been popular.  Since 2006, the number of lawyers working at offshore firms doubled to 2,000.  "We have 300 people in India.  We've added 50 people" in recent months, said Michael J. Dolan, chief executive of the Tusker Group in Austin, Texas that offers document review services based principally on using low cost offshore lawyers.  The company says that forty billion dollars are spent per year are spent on legal document review.  He said his lawyers in India charge $25 an hour, compared with $150 to $300 an hour billed by paralegals and associates doing the same work at US law firms.  In the last 12 months, Tusker Group has grown overall by over 100 percent. 

An even more interesting action is what Geoff Willard, a Northern Virginia lawyer, did last fall.  He is part of a "virtual" law firm, well suited to the current economic conditions.  It does business mainly over the phone and Internet and through video conferencing.  In this way it avoids two of the largest operational costs: a fancy brick-and-mortar office and associates.  His company offers clients substantial savings compared with what they paid before.  "Everyone realizes the big law firm model is broken," said Willard, a partner in Silicon Valley-based Virtual Law Partners.  He has a lot of time to spend with his family because he works out of his home office and he keeps 85 percent of what he generates, he said, instead of 30 percent when he worked at a large law firm.  Virtual Law has grown from eight partners in June, 2008 to 33 in March, 2009.

Another class of law firms doing well are those specializing in bankruptcies.  A small bankruptcy law practice in a cramped and cluttered downtown Boston office posted an opening for a new associate.  Within an hour there were twenty applications.

It seems more than a little ironic that at this time when law schools are still graduating large numbers of lawyers and many are losing their jobs a new hit book is Life Without Lawyers: Liberating America from Too Much Law, by Phillip K. Howard.  But the book is not so much an indictment against lawyers as it is criticism about the whole emphasis on the legal system in the US.  The result is that health care costs more; kids aren't allowed to go outside and play even in the midst of an obesity epidemic; teachers can't maintain control of the classrooms; managers can't be honest with their workers; and governments can't fire bureaucrats who aren't doing their jobs because of tenure and a fear of wrongful dismissal claims.

Howard makes the point that since the 1960s, we've created legal structures that have reduced people's choices and killed common sense.  The result is that people no longer have freedom in their daily choices.  What he calls a "legal self-consciousness" has hit American society like a "heavy lead blanket," poisoning even simple choices that people make in their day to day life.  In other words, so many of us are compelled to live life thinking about self protection from litigation.  "To restore our freedom, we have to purge law from most daily activities," writes Howard.  It seems logical that accomplishing this would be helped by reducing the army of lawyers who have invaded our country.  And so the good news from this economic meltdown is that, just maybe, we might have a less lawyer-plagued society.

3,790 - 7 - 0 - US
Joel S. Hirschhorn has succeeded as: a full professor, University of Wisconsin, Madison; a senior staffer, U.S. Congress (Office of Technology Assessment); head of an environmental consulting company; Director of Environment, Energy and Natural Resources, National Governors Association; now an author and consultant. Recent books are: Sprawl Kills - How Blandburbs Steal Your Time, Health and Money, and Delusional Democracy - Fixing the Republic Without Overthrowing the Government. He has published hundreds of articles in newspapers, magazines, journals and on many web magazine sites. He has given hundreds of talks at a wide range of conferences worldwide. He focuses on American culture, politics and government, and health issues.