Law firms cut back on employees, salaries

A new round of cost-cutting has hit Philadelphia law firms.

Cozen O'Connor said it had laid off 61 support staff, while Dechert L.L.P. confirmed that 19 attorneys in offices around the country had been let go. At the same time, WolfBlock L.L.P. said it had instituted a 10 percent salary cut for associates in an effort to cope with declining revenues after layoffs at the firm late last year.

Partners also likely will see their compensation decline.

"This is not a happy time," said Thomas A. Decker, president and chief executive officer of Cozen O'Connor. "We had some decisions to make."

Decker said that revenues at the firm had remained healthy - last year was the second most profitable in the firm's history. But the layoffs were necessary because the firm had far too many administrative staffers in relation to the number of lawyers, Decker said. He said the lawyer head count had declined from 520 three years ago to 485 today as the firm phased out nonproductive practice areas.

WolfBlock declined to comment publicly on its decision to cut associate salaries 10 percent.

A lawyer familiar with the decision said the move reflected a desire by firm leaders to avoid further layoffs. At the same time, the firm said it would be increasing its bonus pool as an incentive for high-performing associates. The firm late last year laid off 15 associates and partners in an effort to adjust to falling revenue.

"We are going to save with this reduction, we think, the equivalent of six to eight associate positions," the lawyer said. "That is six to eight kids who will still have a job and six to eight families who will still have an income. What we did is ask everyone to sacrifice."

At Dechert, a 1,000-lawyer firm based in Philadelphia, 19 lawyers from various practice groups were laid off Thursday. The layoffs were scattered through the firm's 11 U.S. offices.

Firms across the country are struggling with the loss of revenue as mergers and acquisitions, transactions of all types, and real estate development have shriveled. Bankruptcy work has picked up, but in most cases it has failed to offset other lost business.

Across the nation, employment in the legal industry declined about 1 percent last year, according to the Labor Department.

The job losses in Philadelphia so far have been relatively modest, and most Philadelphia firms remain highly profitable. But the pace seems to be accelerating, in the region and across the country, and law firms are uneasy about where the economy is heading.

About 700 lawyers were laid off Thursday alone, a day the legal press quickly dubbed "Black Thursday."

Among the firms announcing layoffs was DLA Piper, one of the world's largest with 3,700 lawyers. It said it was letting go 80 lawyers and 100 other workers.