Font Size: 
Fenwick & West Cuts Staff Positions
The Recorder
January 30, 2009
Fenwick & West's Mountain View, Calif., office
image: Jason Doiy/The Recorder
Fenwick & West laid off 36 staff on Thursday, and said it was freezing associate salaries for the upcoming year.
But unlike every other major San Francisco Bay Area law firm, including Silicon Valley rivals Cooley Godward Kronish and Wilson Sonsini Goodrich & Rosati, it did not cut attorneys.
Gordon Davidson, chairman of the nearly 300-lawyer Mountain View, Calif., firm, said Fenwick didn't cut attorneys because of the lessons of the dot-com boom when the firm doubled its hiring and then was forced to cut associates in 2001.
"We overhired in 1999 and we, like everyone, did a layoff," Davidson said. "It's better to have moderate growth as opposed to reacting to the twists and turns of the market."
Davidson said the time and money spent hiring and training new lawyers out of law school makes it a bad bargain to lay off associates. He said the firm has been more cautious about hiring lawyers in recent years as a result. In fact, the firm had 226 attorneys in 2003, and as of Aug. 31, 2008, counted 247 full-time equivalents. This week, the firm lists 266 attorneys on its Web site. In contrast, Cooley went from 464 attorneys in 2003 to 645 in 2008.
Fenwick wasn't turning away work in those years, acknowledged managing partner Kate Fritz.
Nor does the moderate growth plan mean that associates are now bustling with work. Fenwick is known for its corporate practice, which has been slow in the recession. Idle corporate associates have been redeployed to work on litigation, Davidson said, adding that the firm is also optimistic that M&A deals will return to keep them busy.
"We're cautiously optimistic about our position and our prospects," he said. "We are not trying to manage short-term profits, we're managing long term for the institution."
Law firm consultant Peter Zeughauser said that considerations about layoffs are different for Fenwick than for its larger Valley rivals like Cooley and 615-lawyer Wilson Sonsini, both of which made deep cuts in recent weeks.
"With a 300-lawyer firm, you can run it like a smaller business, and therefore if the partners want to take less money and keep [associates] around, that's easier to do," said Zeughauser, who heads the Zeughauser Group. "But when you're the size of a Cooley or a Wilson and your competing nationally and internationally for talent, you've got to run it like a business."
The 36 Fenwick employees who were laid off included support staff and paralegals and account for 10 percent of the firm's staff. The cuts came in the Bay Area. Laid-off staff members will be getting two- to six-month severance packages depending on seniority.
The staff cuts were made to save money and because some jobs aren't necessary any more, according to Davidson.
Much like other Bay Area firms, Fenwick turned in mediocre financial results for 2008. Revenue was up 7 percent, but profits per partner dipped by 2 percent to $995,000. Revenue per lawyer also dropped 2 percent. In 2007, gross revenue grew 9 percent, with PPP and RPL both up 8 percent.
The layoffs add to the mounting toll of unemployed legal professionals in the Bay Area. On Wednesday, Morrison & Foerster laid off 201 people. Wilson and Cooley each laid off more than 100 people, and Orrick, Herrington & Sutcliffe cut 75. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian cut half of its first-year class and Pillsbury Winthrop Shaw Pittman recently acknowledged quiet layoffs in 2008.
Law firm consultant Zeughauser said that while attorney layoffs are necessary at many firms during these difficult economic times, there are two major drawbacks.
"The most negative one is that you don't want to be short staffed," he said. "Clearly there are morale issues with layoffs -- I think that those are two big reasons."
