McDermott to cut 60 lawyers
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By Steven R. Strahler
Crain’s Chicago Business
Feb. 03, 2009
McDermott Will & Emery LLP is laying off 60 lawyers, or about 5% of its total staff of nearly 1,100 attorneys.
Like other Chicago firms, including Mayer Brown LLP and Jenner & Block LLP, that have been quietly laying off attorneys, McDermott is reacting to a legal industry recession that is expected to be the worst in two decades.
“The business of our clients has slowed and this has affected our own levels of activity, particularly in the transactional area,” McDermott’s Boston-based chairman, Harvey Freishtat, wrote in a memo Tuesday to McDermott personnel. He said 89 staffers who are not lawyers also would be laid off.
Demand for corporate and litigation services declined nationwide last year by nearly 4%, according to legal consultant Hildebrandt International. Hildebrandt and Citi Private Bank project that profits per equity partner this year will fall by as much as 10% at most law firms and by as much as 15% or more at others with significant capital markets practices.
A person familiar with McDermott’s decision said it followed a “very somber” meeting of partners on Monday.
McDermott was founded here in 1934 and focused initially on tax law. It now provides a range of business-oriented legal services in 16 offices in the United States, Europe and China.
McDermott said the layoffs would be limited to U.S. locations. It didn’t say how many lawyers would be cut among the approximately 325 in Chicago.
The firm’s New York office was exposed to Wall Street’s meltdown, while its Chicago office was hit by a steep falloff in private-equity and leveraged finance work. McDermott also has a robust intellectual property, or patent, practice.
Quentin G. “George” Heisler Jr., the partner in charge of McDermott’s Chicago office, declined to comment.
“This is about survival,” said Kay Hoppe, president of Chicago-based legal recruiter Credentia Inc., speaking about legal industry trends in general. “The market conditions have exacerbated what most of these firms have as a flaw. They have got a lot of people who are good lawyers who are not business producers. How much of that can you carry? The margins for a generous business model have disappeared.”
Hildebrandt and Citi said that the collapse of credit markets last September affected the entire legal industry, not just firms with financial practices that had been suffering before the crunch.
“One of the unfortunate effects of the freezing of the credit markets was the hoarding of cash by major law firm clients during the last quarter of the year, at precisely the time when cash collections were most needed by the firms.”
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