In its most recent round of reductions, Sonnenschein Nath & Rosenthal has cut about 30 lawyers this month, including 10 income partners, according to sources familiar with the firm's cost cutting.
The firm eliminated most of the attorney positions in the real estate and corporate practices areas, cutting those lawyers who have remained idle because of the ongoing slowdown in banking, capital markets, real estate development, and mergers and acquisitions, the sources said. Most of the lawyers, located across the firm's offices, are expected to exit by Nov. 1.
This is the third round of dismissals for Sonnenschein in the past 18 months. The firm is not alone in having multiple rounds of lawyer cuts as it tries to align costs with reduced revenue.
Before the recession began in late 2007, Sonnenschein had been on a major growth campaign, seeking to hire enough lawyers from other firms to expand to 1,000 attorneys within a few years. Last December, it absorbed 100 lawyers from the collapsing Thacher Proffitt & Wood. The firm said it had 703 lawyers as of July 31 of this year. The firm, which was founded in Chicago, has offices in 11 U.S. cities and in Brussels and Zurich.
"Sonnenschein was on a big growth spurt," said Joel Henning, a Chicago legal consultant who advises firms on strategy and isn't working with Sonnenschein. "When the work evaporated, that became a tough strategy to execute."
Still, reducing the number of lawyers and their related expense now may be a smart move, said Art Gunther, a Chicago legal recruiter who leads the Gunther Group and also isn't working with Sonnenschein. "You're not going to be able to grow to 1,000 lawyers in this economy so you might as well get your house in order and be ready to grow when the economy improves," he said.
Last week, the legal news Web site Above the Law reported, also based on unnamed sources, that less than 24 associates had been let go in this latest layoff. Sonnenschein responded with its only comment to date on the latest reductions, acknowledging that when it can't transfer resources from slow practices areas to busier groups, it sometimes "must make prudent business decisions that unfortunately affect some very good people."