16 November 2009

Big Law Layoffs Strongly Regional

Large law firms reduced their staff of lawyers by about 4% between 2008 and 2009. But, there are vast regional disparities in these numbers. Big firms based in New York City (45 of the 250 largest) have laid off an average of 49% of their lawyers in a single year. Those based in Chicago (17 of the 250 largest) have laid off an average of 20% of their lawyers. Cuts at large law firms based in other parts of the United States have been far smaller. Los Angeles based firms have cut 3.2%, those based in San Francisco have cut 0.2% and those based in Washington D.C. have cut 3.8%, for example.

The largest law firms have had the biggest lay offs.

At one level, these results aren't surprising. The financial crisis can be seen as a housing bubble collapse that led to a financial industry collapse that led to the Great Recession. The financial industry part of the collapse intensely impacted investment banks, derivatives trading firms and big money center banks, while leaving commercial banking far less ravaged. The financial firms most hard hit by the financial crisis are heavily concentrated in New York City and Chicago, which are home to the New York Stock Exchange and Chicago Commodities Exchange respectively, and the law firms that represent them tend to have headquarters near their biggest clients. So, these firms are the ones that should be hit the hardest by the financial crisis.

But, since the high end of the financial markets generally don't employ that many people, in either the firms themselves, or in the law firms that they serve, compared to the total job markets in these major metropolitian areas, the lay offs are invisible in larger unemployment figures. Goldman Sachs and Lehman Brothers (the latter now bankrupt) each employed about 22,000 people worldwide, from the mailroom to the board room. Large commercial banks, in contrast, employ more than ten times as many people.

Also notably, neither the housing slump, nor the general economic slump in the economy seem to have had much of an impact on the biggest law firms.


Michael Malak said...

When profits sag, it's time to dust off the patent portfolios and otherwise seek non-producing means of revenue.

Andrew Oh-Willeke said...

Misread data, will correct Same trends, but less dramatic.

peter said...

Colorado unemployment is improving, but conditions vary throughout the state according to this heat map: