Following a significant drop in gross revenues and partner profits in 2012, Washington-based law firm Patton Boggs has laid off 30 lawyers and 35 other employees, firm managing partner Edward Newberry said Friday.
The 485-lawyer firm limited its lawyer dismissals to associates and staff attorneys. The laid-off staffers included paralegals, a public policy adviser and support staff. All told, the cuts saved the firm $14.7 million, according to Newberry.
No partners received pink slips. But Newberry said after his initial interview with the National Law Journal that about 18 partners were told that their “performance here isn’t satisfactory.” In conversations during the past six weeks, he said, the partners were told that they should leave before the end of the year if their performance doesn’t improve.
The biggest attorney cuts occurred in the firm’s Newark, New Jersey, office. But Patton employees also lost jobs in Washington, New York, Dallas and Denver. The firm’s outposts in Anchorage, Alaska, and the Middle East were spared. Newberry did not specify which practice groups the laid-off attorneys worked with.
Newberry said in an interview after a meeting with partners Friday morning that Patton engaged in a "right-sizing exercise" on Thursday, and that he doesn’t expect any further layoffs this year.
"We took the action we felt we needed to protect the profitability of the firm and the financial strength of the firm in light of what we anticipate revenue will be this year," he said, adding that Patton didn’t lay off employees during the recession when many other law firms did.
Patton in 2013 could exceed the $318 million in gross revenues it received in 2012, Newberry said. But some work is ending and could take time to replace, he said.
Newberry blamed the firm’s poor financial showing in 2012 on clients’ changing payment patterns, deferred payments and a decline in demand from bigger clients.
The winding down of a major case in New Jersey contributed to many of the layoffs, Newberry said. But he declined to identify the specific matter. December, however, marked the end of another chapter in Patton Boggs’ long-running fight representing a group of Ecuadorians against Chevron Corp.
In February 2012, Patton Boggs filed a complaint against Chevron, challenging U.S. District Judge Lewis Kaplan’s injunction to prevent judgment payment. The firm is trying to collect the $21.8 million bond posted by Chevron to prevent payment. On December 17, the case, originally filed in the U.S. District Court for the District of New Jersey, was transferred to the Southern District of New York.
The firm’s 2012 financial metrics declined in all categories, according to the responses the firm provided during the interview to the annual The American Lawyer 100 survey. Gross revenues fell from 2011 to 2012 by 6.3 percent. Revenue per lawyer and profits per partner fell 5.1 percent to $655,000 and a whopping 14.9 percent to $736,000, respectively. Net income fell 14.1 percent to $77.3 million.
All of the fiscal year 2011 numbers are from The American Lawyer 100 survey, with the exception of net income, which was reported in Legal Times last January.
Firmwide headcount dropped a little more than 1 percent, from 491 attorneys in 2011 to 485 at the end of 2012. The firm added one additional equity partner to total 105. Nonequity partners saw a 4.7 percent decline to 123 at the end of 2012. Headcount numbers from 2011 are based on NLJ 350 reporting.
Newberry said most clients were "indifferent" to the news about the layoffs—and he said he received a standing ovation from staff when he spoke to them on Friday morning. "A number of people stood up and said we’re doing exactly what we need to do to make this firm a great competitor in a very difficult legal market place," he said.
In 2013, Newberry said the firm is making major investments, including opening an office in Dubai, moving support functions to Northern Virginia and refurbishing its Washington office. He added that the firm also is looking to establish an office in Houston. He said the firm will continue to focus on ensuring that Patton, a lobbying powerhouse in D.C. is "one of the best law firms to work for" in the United States.
"We’re making smart, strategic investments, and we’ll continue to focus on business development, we’ll continue to focus on disciplined expense management, making sure revenue is aligned with expenses and head count, we’ll continue to focus on strategic growth of the firm," Newberry said.