Can firms cut, but be growing?

CHICAGO — Even as large Chicago law firms, including Sonnenschein Nath & Rosenthal and Jenner & Block, are pushing some lawyers out the door, they say they’re growing by hiring new attorneys.

A week before news broke on Oct. 15 that Sonnenschein planned to cut 25 lawyers, the firm announced that it was opening a Zurich, Switzerland, office with two new partners and, in September, it said that it was expanding its patent litigation team with two new lawyers in Palo Alto, Calif.

Although Jenner cut 10 partners in recent weeks, the firm’s managing partner, Susan Levy, is adamant that her firm is “still growing.

“We are aggressively in the lateral market,” Levy said.

Perfect opportunity

Firm leaders say the difficult economic times require them to be particularly vigilant in managing costs, including head count.

Still, the lawyer reductions are becoming a routine way for firms to eliminate attorneys who aren’t generating enough revenue in favor of hiring those who promise more profits, consultants said.

Tough economic conditions give firms the perfect excuse for getting rid of lawyers who are meager moneymakers, boosting the firm’s profit-per-partner ratio and helping it attract stronger lawyers, they say.

Partners who don’t have books of business are becoming irrelevant, and associates are cost items if there’s not sufficient work, said John Cashman, a recruiter at Major, Lindsey & Africa.

Katten Muchin Rosenman, another firm with its largest office in Chicago, also laid off 21 associates and counsel last week. Nonetheless, the firm is also still adding lawyers even as it makes those cuts, Cashman said.

“Firms want to make the pyramids steeper, hiring partners that have a whole lot of associates doing the work,” Cashman said. “It’s all about attracting lateral partners that have business.”

In the past, firms might have transferred lawyers working in slow practice areas to other work, with the long-term perspective that it would still want the attorneys on hand in two years when there was a turnaround, said Amy McCormack, a legal recruiter in Chicago who leads McCormack Schreiber. Now, firms are more short-sighted and are likely to just cut those attorneys, she said.

“Firms are taking a much more of a business focus in their decisions,” McCormack said. “The real world of business is not always gracious.”

This article was originally published online October 22, 2008.