CHICAGO — The law firm McDermott, Will & Emery has cut 60 lawyers, or about 5% of its attorney head count, and 89 staff employees, citing a slowdown in clients’ business and a resulting drop in firm work on corporate transactions, among other matters.
“We are not immune to the continued deterioration in market conditions,” firm Chairman Harvey Freishtat said in a memo today to employees. “The business of our clients has slowed and this has affected our own levels of activity, particularly in the transactional area.”
The firm, which was founded in Chicago, had about 1,100 lawyers and 1,210 nonattorney employees before the reduction. McDermott follows in the footsteps of other major law firms across the country, including Morrison & Foerster, Blank Rome and Mayer Brown, that have also cut their attorney workforces in recent months in the face of decreased client demand in certain areas, such as real estate and financial securities work.
Firms with a large presence in Chicago, where McDermott has its biggest office, seem to have been particularly hard hit, with Katten Muchin Rosenman; Sonnenschein Nath & Rosenthal; Kirkland & Ellis; and Seyfarth Shaw all paring attorneys since the beginning of October, sometimes in step with annual evaluations.
Even smaller Chicago firms have been trimming their lawyer workforces, noting a slowdown in work from clients who are also cutting their own budgets in response to the global economic recession. For instance, Levenfeld Pearlstein, which froze rates this year in response to client cost pressures; Wildman, Harrold, Allen & Dixon; and Neal Gerber & Eisenberg each eliminated a handful of lawyer positions last month.
Chicago Legal Search recruiter Chris Percival said that the city was simply catching up with reductions that law firms based primarily on the coasts had made earlier, mainly last year. Still, another Chicago recruiter, Art Gunther, who leads the Gunther Group, said Chicago firms may be cutting more because they tend to operate leaner than their competitors.
“Chicago firms are pretty financially conservative and don’t want to be left with more personnel than they really need,” Gunther said. “While that may be something that every firm in the country is worried about, I think Chicago firms have a history of being frugally managed.”
The economic environment also offers an opportunity to “thin the ranks without a reputational blow,” Gunther said.
Freishtat said in the memo that the firm “performed well” last year and “remains strong” going into this year. He plans to start visiting all 15 of the offices next week to talk with employees about the financial results and plans for this year. McDermott declined to say how many attorneys were cut from each of its offices or practice areas.
“Be assured that we remain a very strong firm with a deep talent pool, an impressive and diverse base of clients and practices, an international platform, and a healthy balance sheet,” said Freishtat, who is based in the firm’s Boston office.
The chairman called the decision to cut workers “tremendously difficult” and said that the staff affected will be meeting with their managers today. The firm will provide severance benefits, career counseling, and a fund “to assist staff who may face economic hardship after leaving the firm,” the memo said.
McDermott has taken other steps to respond to the market downturn’s impact on clients, including additional expense reductions and an expansion of client services.