Originally Published September 24, 2013
In the wake of recent support-staff reductions at Duane Morris, K&L Gates and other large firms, consultants and recruiters said more of these types of cuts are expected as firms seek to increase profits and shifts in technology gradually phase out the need for traditional clerical functions.
“I’m surprised that anybody’s surprised,” Thomas S. Clay, a principal with Altman Weil, said Friday, adding, “You’re going to continue to see it as firms look in a slow-growth or no-growth economy” to save money.
Nonlawyer staff is often the first cost firms look at when considering reductions, according to Clay.
Clay said nonlawyer staffing costs account for on average around 40 percent of most large firms’ expenses.
“By far and away the biggest savings area is people,” Clay said.
The second largest expense for firms, Clay added, is space. So for those firms that are not locked into long-term leases in huge offices, reducing the number of bodies could eventually translate to savings on that front as well.
As Glenn D. Blumenfeld of Tactix Real Estate Advisors in Philadelphia told The Legal for its “Thinking Small” series on firms revamping their office spaces: Many firms’ offices today are “a sea of empty secretarial stations that are really spaces to store empty filing boxes.”
Add to that the fact that technological advances have rendered many of the traditional duties of law firm support staff nearly obsolete and it’s little wonder why firms might look to reduce that expense, according to Clay.
“I was giving a speech about the need to move further and further toward fewer and fewer support staff and one attorney said, ‘Yes, but who’s going to do my filing?’ Well, nobody,” Clay said. “What lawyers have gotten used to are a lot of trappings.”
Boston-based legal consultant Jeff Coburn agreed, saying the leverage ratio of lawyers to support staff at large firms that was at one time roughly 1-to-1 has changed over the years so that, in many instances, two, three or even four attorneys might share a single secretary.
Coburn said technology has simply made it unnecessary for firms to pay people to draft and file documents, call meetings or take notes.
And, as several consultants and recruiters told The Legal, younger attorneys have little use for those functions anyway.
“Technology changed everything,” Philadelphia-based legal staff recruiter Peggy Kruza added. “The young associates, being as tech-y as they are, are more inclined to do their own work and are not as comfortable delegating as some of the older partners are.”
So, as today’s generation of young lawyers eventually replace the more senior lawyers at these firms, the old support-staff model will become increasingly outmoded, Coburn said.
“The ratio of nonprofessionals to professionals is going to continue to go down,” Coburn said. “It’s all part of law firms becoming businesses.”
But Coburn added that while the recent spate of large law firm staff reductions are part of an overarching trend of deleveraging, each firm’s reasoning for making those cuts is unique.
Duane Morris confirmed last week that it had eliminated 17 secretary and paralegal positions across its 25 offices.
Duane Morris spokesman Joshua Peck said the firm made the move in an attempt “to get our ratios back in line with our previous levels.”
“Our numbers had gotten out of alignment due to our hiring of lateral attorneys — some 42 partners and counsel in the last two years alone,” Peck said in an emailed statement. “Many of those brought legal assistants with them, and the ratio has been compounded by very low turnover in our legal assistant ranks. The individual decisions were based on merit and not length of service. Our continual investment throughout in technology and the high quality of our professional and administrative staff made this an appropriate and good business decision for the firm.”
In August, legal blog Above the Law reported that K&L Gates was closing its document services department in Washington, D.C., and Seattle, resulting in the elimination of 24 to 30 support positions and the relocation of the department’s headquarters to its Pittsburgh office.
A K&L Gates spokesman declined comment to The Legal regarding the cuts.
In January, Blank Rome offered voluntary separation packages to its entire legal secretarial pool in an effort to trim its ranks as the firm restructured the way attorneys and support staff work together.
Firm Chairman Alan J. Hoffman told The Legal at the time the reduction was part of the firm’s overall effort to move into a more “efficient and flexible” service delivery model that better represents the fact that its younger attorneys are not utilizing secretaries the way more senior attorneys do.
Hoffman said that, by 2015 or 2016, the firm hopes to be in redesigned space that better reflects how many secretaries it has and where they need to be located in the office.
“We have new associates whose use of secretarial support is much different than senior partners who are in their 60s,” Hoffman said.
Depending on how well they use technology, senior partners might work with secretaries on a 1-1 or 2-1 ratio, Hoffman said. On the other hand, associates up through year six are not using secretaries to type briefs and are rather doing it themselves, he said. So associates are using secretaries at a rate of six or seven attorneys to every one secretary.
Hoffman also said the reductions had nothing to do with the firm’s financial performance in 2012.
Pittsburgh-based legal recruiter Maura McAnney said post-recession staff cuts are often more about eliminating unnecessary expenses than attempting to bail out a financially struggling firm.
“As law firms continue to modernize, lawyers become more and more technologically savvy and there’s less of a need for certain types of support staff,” McAnney said. “Not every firm that engages in layoffs is having economic difficulties. It’s just a rightsizing of the workplace due to technological advances.”
The result from a support-staff recruitment angle, Kruza said, is a heightened standard for potential staff hires as firms increasingly look for college-educated, experienced and technologically-savvy candidates with a highly developed database and verbal skills to fill those roles.
“The secretaries that kept up with the software, they were good to go,” Kruza said. “There is still a need for secretaries and document people with really good skill sets because we’re dealing with international markets now.”
The bottom line, Kruza said, is that the typical law firm support-staff position is now viewed as being “more of a career than a job.”
Similarly, consultants and recruiters told The Legal that firms are increasingly investing in more specialized nonlawyer positions in their business development and information technology departments.
While IT departments are not direct profit centers, they can maximize a firm’s productivity, which in turn leads to increased revenue, Coburn said.
And even though the salaries for IT positions tend to be higher than those for secretarial positions, the value usually outweighs the cost, Clay added.
“The technology people are expensive but they let you drive down labor costs so it’s a benefit,” Clay said.
This notion of spending less to produce more is part of what Coburn described as the “new normal” in a profession that was forced to undergo some drastic changes nearly overnight during the recession.
And while the economic downturn didn’t necessarily start the trend of reducing support staff in order to increase profitability, it did accelerate it, according to Coburn.
“The speed and the depth with which this is done is greater now than it would have been 20 years ago,” Coburn said.
A few decades ago, Coburn said, laying off support staff was “embarrassing” for firms because to outsiders it signaled financial trouble.
Today, however, firms are less sheepish about going public with support-staff layoffs because they’re viewed more as efficiency measures aimed at maximizing the value that is ultimately passed on to the client.
But wouldn’t it be even more cost-efficient for firms to cut underperforming partners, the cost of which are bound to far exceed that of a secretary’s salary?
That is happening, Clay said, but firms are less likely to acknowledge it publicly.
“Underproductive or chronically unproductive lawyers are being looked at very hard,” Clay said, pointing to the decrease in the number of equity partners at many large firms in recent years.
“Shedding partners is still embarrassing” for firms, Coburn said, adding that many firms are not taking stock of their partners nearly as much as they should be.
“There needs to be a hard look at how law firms are enabling partners to remain way behind their economic value,” Coburn said.