Phila.'s law firms weather a storm

The regional economy may be struggling, but Philadelphia law firms say they are weathering the slowdown without the need for big cutbacks.

That stands in sharp contrast to firms in New York, which have been laying off lawyers as they seek to cope with chaos in the ravaged credit markets. If anything, Center City firms appear still to be on a path toward higher revenue, if not at the accelerated pace of previous years.

"We missed out on the upside that many of the big New York firms were getting, but we don't face the downside either," said David Antzis, managing partner of the 250-lawyer Saul Ewing L.L.P.

The midsize companies that are a staple for Saul Ewing and other firms in the region seem to have been largely unaffected by the economic turbulence.

Where there has been cost cutting, it has been modest - a small number of administrative staffers were laid off at the 550-lawyer Ballard, Spahr, Andrews & Ingersoll L.L.P. firm earlier this year, and a handful of lawyers in the hard-hit finance and real estate practice group at Dechert L.L.P. were reassigned in February.

Antzis said Saul Ewing had been trimming secretarial jobs through attrition and this year had brought in fewer summer associates or interns than in 2007. The firm is projecting a 7 percent increase in revenue this year if trends continue.

In contrast to the galloping increases of the recent past in first-year associate salaries, compensation for freshly minted lawyers at the biggest firms has been flat.

The saving grace for most of the firms is that they were not heavily into deals that hinged on the securitized loans and related debt instruments that have been creating havoc with the New York banks and their law firms.

The 650-lawyer Duane Morris L.L.P., another Center City law firm, said that it cut back on hiring lawyers last year, anticipating an economic downturn. But John Soroko, the chairman and chief executive officer, said that because revenue had held up well, the firm lately had been scrambling to hire lawyers for healthy practice areas.

"We are monitoring our business very closely, and within a reasonable degree of tolerance, revenues are tracking very closely to where they were in 2007," he said. "We are simply a little less subject to market volatility, for better or for worse."

Theodore Decker, president and CEO of Cozen O'Connor, which has 500 lawyers, said business had been marginally better than last year, with litigation and bankruptcy practices showing strong growth.

"We are all worried that the next deal is not coming in, but so far they are coming in," he said.

Smaller firms say they are holding their own as well.

James Hennessey of Dilworth Paxson L.L.P., a 103-lawyer firm in Center City, also said that bankruptcy and litigation work had grown, even as corporate work had slowed.

Officially, the U.S. economy has avoided recession, growing at a rate of about 1 percent in the first quarter and turning in a surprising 1.9 percent increase in the quarter ended June 30. In the Northeast, Moody's/Economy.com, in a report released in June, said three states - Delaware, Rhode Island and Maine - already were in recessions. But Philadelphia's economy was "treading water."

Dechert, a 1,000-lawyer Philadelphia firm, drew notice earlier this year when it was disclosed that 13 associates from its finance and real estate practice areas, hard hit by the credit-market problems, had been given the option of taking a severance package or being reassigned, a measure aimed at trimming costs.

Yet those trims seem relatively small in comparison with some of the bigger cutbacks outside Philadelphia.

The New York law firm of Cadwalader, Wickersham & Taft L.L.P., one of the nation's most profitable, announced Wednesday that it was laying off 96 lawyers because of the impact the troubled credit markets had had on its business.

In January, the firm laid off 36 associates.

Cadwalader had leaned heavily on its finance practice, like other New York firms, and thus has been hit hard.

Firms with more diversified practices appear to be faring better. Morgan, Lewis & Bockius L.L.P., a Center City firm with 1,455 lawyers in the United States and abroad, said revenue was on track to increase by double digits this year.

Some practice areas, including energy, life sciences and antitrust, are booming. In September, Morgan Lewis lawyers won a $47.7 million contract from the Department of Energy to help it win licensing for a planned high-level nuclear-waste storage site at Yucca Mountain in Nevada.

Overall, revenue in the energy group is up 30 percent this year, said Thomas Sharbaugh, a merger and acquisition lawyer for Morgan Lewis and the firm's managing partner for operations.

"When you see big layoffs, and every speck of news that you read is negative, it is surprising to see things going up," he said.