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The scores of attorney and staff layoffs at large law firms may be grabbing the headlines, but small and mid-sized firms in New York also are making tough decisions on how to survive the current economic crisis. From reining in day-to-day expenses to refocusing their practice areas, these firms are challenged to meet the shifting needs of clients while insuring themselves the revenue they need to stay in business. The majority of New York attorneys in private practice, around 83 percent, are either solo practitioners or ply their craft in firms with fewer than 10 attorneys, according to a 2006 report by a commission appointed by then-Chief Judge Judith S. Kaye to study small firm and solo practices. Wall Street layoffs, mortgage foreclosures on a massive scale and a freeze in the financial transaction sector have affected attorneys across all practice areas, some more than others. The smaller the firm, the bigger the impact. “Most small firms have cut back on staffing,” said Mark S. Piazza of Staten Island, N.Y.’s Jacobi, Sieghardt Bousanti & Piazza, a five-attorney general practice firm. Piazza’s firm has not cut any attorney positions but has cut back on business costs. The firm has changed its Westlaw package and eliminated excess phone lines, cutting its phone bills in half. “When you start to add it up, you can save $20,000 to $30,000 a year, and that adds up for a small firm,” Piazza said. Meanwhile, some solo practitioners are feeling the crunch even more than their small-firm counterparts. Manhattan attorney Alfreida B. Kenny quit eating out long ago and has now switched from taking cabs to riding the subway. “I’m feeling it quite a lot,” Kenny said of the toll the current economic situation has taken on her elder law practice. “Clients are paying their bills slowly or not paying their full bills at the end of the month.” Some mid-size firms have so far avoided making cuts in overhead or staff by shifting attorneys to other kinds of work. “Buyers are backing out of deals, walking away from down payments, banks are requiring 50 percent equity when it used to be 30 or 20 percent,” said Eric C. Rubenstein, a partner in Long Island, N.Y.’s Ruskin Moscou Faltischek, who co-chairs the firm’s real estate practice. Purchases or sales of commercial properties other than those that were in the pipeline have ground to a halt, Rubenstein said, as businesses curtail operations and close up office space. That means lawyers in the 60-attorney Uniondale, N.Y., firm have more time to spend pouring over existing contracts that he says are being “negotiated to death.” “I believe every project is affected by the recession,” said Steven R. Schlesinger, a partner in Garden City, N.Y.’s Jaspan Schlesinger. The 70-lawyer firm is representing developer Donald Trump in a dispute over a loan to build a Chicago skyscraper. Trump is arguing that the current global economic situation should trigger a force majeure clause in the agreement allowing him an extension to repay the loan. According to Schlesinger, the litigation was a result of “banks being nervous and pushing panic buttons where none needed to be pushed.” The case is pending before Queens Supreme Court Justice Orin R. Kitzes. Under the terms of the loan agreement, venue could be located anywhere in New York City. GLUM RESIDENTIAL FRONT A combination of skittish lenders and homeowners struggling to make mortgage payments has made the outlook on the residential front glum as well. According to the New York Office of Court Administration, foreclosure filings since January 2005 have soared across the state, with a cumulative increase of more than 150 percent. The OCA reports about 41,200 foreclosures in 2008, up from 22,350 in 2005. For Manhattan attorney Jeffrey L. Weinstein, the influx of foreclosure cases has resulted in long days haggling with banks on behalf of his clients, many of whom still have jobs but are unable to make the payments on their homes. “Every day I get calls from homeowners seeking [downward] modifications,” said Weinstein, whose firm has six lawyers. One of his clients had the same house and the same income as he had two years ago, but the adjustable rate on his mortgage had increased to 4 percent more than he could pay. The bank offered to reduce the rate by less than a percentage point. “It was more than this guy can afford and this is a guy that has a job,” Weinstein said, adding that he would go back to the bank and ask it to reconsider. The process can take weeks or months with a best case result of a three-month grace period on loan payments. At the end of the 90 days, however, all the fees are due. “Buying a home is supposed to be a positive thing in a person’s life that represents moving forward and we are holding people’s hands trying to stop them from falling backwards,” he said. The flip side of defending so many foreclosures is that homeowners have little money left over to pay legal fees. “Unless people get a really nice modification, it’s hard to be paid for our time and our services,” Weinstein explained. He said he looks at his firm’s efforts as investments in goodwill that will bring repeat business from clients he currently represents. ‘A SENSE OF URGENCY’ The fiscal meltdown is affecting not only brick-and-mortar assets but is also depleting savings and retirement accounts, said Jennifer B. Cona, an elder law and estate planning attorney on Long Island. Cona’s practice, however, has picked up since the economic downturn. “We have seen clients coming in with their nest egg cut in half,” said Cona, who is the managing partner of Genser Dubow Genser & Cona, an eight-attorney firm in Melville, N.Y. Economic uncertainty has prompted more people to think long-term, she added, resulting in more trusts being set up than in years past. She said she had seen a 20 percent increase in the creation of trusts over the least year. “It is definitely giving people a sense of urgency,” Cona said, translating into more business for her law firm. “We are moving forward despite the economy.” The key to getting through rough patches, according to Long Island attorney Brian Griffin, is to funnel more resources into the areas unaffected by the slowdown. One such area is criminal defense, Griffin’s primary focus. His clients range from accused drunken drivers to Rikers Island inmates. The partner in Foley, Griffin, Jacobson & Faria, a six-attorney firm in Garden City, said he has not seen any increase in criminal activity with the recession. But he added that criminal defense tends to be recession-proof. “When someone is charged with a crime, they are going to need a criminal defense lawyer,” he said, adding that criminal defendants usually pay on schedule because they have “a lot at stake.” But Griffin’s firm also handles real estate matters and represents a number of lenders, including a major bank that closed its doors last year. It has had to make up for the stagnation in transactional work by taking on more personal injury and estate cases. “A law firm is a business like any other and you have to watch the bottom line,” Griffin said. “You can never rely on one or two or three clients and, thankfully we never did that.” Michael H. Sahn, managing partner of Sahn Ward & Baker in Uniondale, agreed that striking “a balance” is key to guiding a practice through uncertain times. “Over the last several years we have managed to find a balance,” Sahn said of his nine-attorney firm that focuses primarily on zoning and land use. The firm takes on a steady flow of municipal work, because as Sahn explains, “municipalities are never going out of business.” For solo practitioner Harry H. Kutner, the economic slowdown has meant taking a hard look at how much pro bono work he could afford to do and still run a profitable business. “I’ve been more selective but I will still represent clients who cannot afford to pay,” said Kutner, who splits his Mineola practice between criminal defense, personal injury and commercial litigation. On the cases where he expects payment, “I just make it clear that I am not going to work for free,” said Kutner, who has practiced law for more than 30 years. “I guess I got smart later on in life.” SURVIVAL TIPS Scott Lanin, a Manhattan solo practitioner who has practiced for 20 years, offers advice for getting through hard times. Lanin’s practice includes litigation, debtor/creditor matters, bankruptcy and foreclosure. 1. Don’t take every case that walks in the door. Not every new caller should become a client. Use your “spidey” sense to figure out which case may be trouble later. 2. Try to determine a reasonable litigation budget up front. That $5,000 fee that seems enticing now may not be enough to cover the work later if your client runs into financial difficulties. 3. Consider related practice areas. Transactional real estate attorneys who are idle may be able to help clients try loan modifications on defaulted mortgages until closings and contract work pick up again. But be aware that some of these clients will need litigation or bankruptcy assistance too, so consider affiliating on an of-counsel basis with an attorney who concentrates in those areas if you are not comfortable with that type of work. 4. Offer free consults by phone if possible to pre-screen clients before you meet in the office. This is more efficient and saves time. Consider charging a nominal in-office consultation fee as that may leave you with the potential clients who are really serious about retaining you. 5. Pay attention to your “health account” as much as your “bank account.” When you are the most stressed, that is the time you need to exercise. I personally have a second-degree black belt in Tae Kwon Do and have been doing kickboxing for 25 years. I work out twice a week and it helps clear my mind. 6. Be nice to the people you meet on the way up; you’ll meet them again on the way down. There are plenty of litigators with obnoxious personalities — that does not mean they are good at what they do or should be emulated.

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