In what may be a sign of continued weakness in the commercial litigation market, one of Connecticut's largest grossing law firm's confirmed Thursday that it is laying off as many as 40 people, including support staffers and attorneys.
Top executives at Day Pitney said the layoffs were spread firmwide, and include up to 10 attorneys. Day Pitney's two main offices are in Hartford and Florham Park in northern New Jersey, with additional offices nestled between Boston and Washington, D.C.
The firm last had major layoffs in 2009, at the beginning of the recession. The latest cutbacks come less than a year after the firm brought in its largest incoming associate class ever, including 16 new hires in Connecticut. Stanley A. Twardy Jr., the Hartford-based managing partner of the firm, declined to say how many lawyers were being let go in Connecticut, where Day Pitney also has office in Stamford, West Hartford and New Haven.
"The staff reductions were spread out across all of the offices," Twardy said. He declined to say what prompted the layoffs, "out of respect for those affected." Twardy would not answer other questions, deferring to comments to a statement that was released by the firm.
"As the legal industry changes, we continue to evaluate and reshape our staff to better align with industry norms and client expectations for excellence," said the statement, which was released by Day Pitney spokeswoman Xenia Kobylarz. "This reduction, which brings us more in line with industry-wide attorney/staff ratios, affects about 30 employees."
The layoffs, she continued, "affect about 30 staff immediately and fewer than 10 attorneys. Those attorneys will remain with the firm until a date yet to be announced, in November."
Day Pitney sources said the layoffs were focused on the commercial litigation practice. All of the attorneys who were let go were at the associate or counsel level, and were not partners, the sources said.
The firm was created in 2007 by a merger between Hartford-based Day Berry & Howard and New Jersey-based Pitney Hardin.
In 2009, had two rounds of layoffs. In February of that year, 66 paralegals and non-professional staffers were let go. Later, in May, some 31 support staffers and nine lawyers in the firm's Connecticut offices were given pink slips, taking the brunt of firmwide cuts. Those layoffs, the firm said at the time, were prompted by declining demand for legal services, and "excess capacity" of personnel.
After the current round of layoffs, Day Pitney will have just over 300 lawyers after the layoffs, down from nearly 400 at its peak. The firm had gross revenues of $185 million in 2012, based on research by The American Lawyer, an affiliate of the Connecticut Law Tribune.
Law firm management consultant Peter Giuliani of Weston had not heard about the layoffs, but said the news was not all that surprising. "I'm hearing that clients are continuing to put more push back on rates and staffing levels, and to some degree they are pushing back on the amount of associates that are working on their legal matters," he said. "And the law firms are responding to that pressure."
While he declined to speculate on the factors behind the Day Pitney layoffs, Giuliani said he expects more firms in Connecticut to look for possible staffing reductions in the near future, possibly because they hired more lawyers than they needed in hopes of a more robust economic recovery.
Practice areas that he predicted will be affected include corporate litigation and real estate practices. "Real estate is down, although it seems to be clawing its way back. And I still see some weakness in the corporate practice area."
Giuliani continued: "It may be that the fundamentals of law practice economics have changed, and we've got a new world we've got to get used to."
The layoffs mark at least the third time this summer that a large firm has tightened its belt. In June, Weil, Gotshal & Manges announced it was laying off 60 lawyers and 110 support staffers from its New York and Boston offices. In June, national firm Jones Day laid off 65 staff members, including 45 IT workers and several attorneys in its Cleveland office.
Two factors distinguish this round from the layoffs in 2009, when more than 1,100 lawyers lost their jobs in a single week following what was known as "Black Thursday."
In 2009, Giuliani said, "Those layoffs were a crisis response."
Now, he said, the firms are realizing one of two things. "Either they didn't cut enough in 2009 … or they hired too many people and the margins haven't gotten back to where they were before the crisis."
There are some, he said, "Who feel those margins are not going to come back."