Law Firms Search For Creative Ways To Downsize As the economic decline continues, major law firms across the country have been struggling with a decreased demand for lawyers. Some firms are realizing they may have offered jobs to more lawyers then they can pay. Some are trying new ways — other than layoffs — to shave their payroll costs.
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Law Firms Search For Creative Ways To Downsize

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Law Firms Search For Creative Ways To Downsize

Law Firms Search For Creative Ways To Downsize

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SCOTT SIMON, host:

As the recession continues, major law firms across the country are struggling with the decreased demand for lawyers. Some may have offered jobs to more lawyers than they can pay. Shia Levitt reports a number of law firms are trying new ways to trim their payrolls.

SHIA LEVITT: Major law firms benefited from strong business growth this past decade, and many increased their number of new hires each year to keep up with demand amid soaring profits.

Mr. DAN DIPIETRO (Analyst, Citigroup): Too many lawyers chasing too little business.

LEVITT: Dan DiPietro analyzes business trends within law firms for Citigroup. He says many firms are now looking for ways to decrease their employee expenses. Among the top 100 revenue-grossing law firms, layoffs have become a common way to address the problem.

Mr. DIPIETRO: I think you've seen almost virtually every Am Law 100 firm and many in the Am Law second hundred announce layoffs. I would say it's the minority of firms that have not laid off associates and staff.

LEVITT: Several firms have announced salary cuts. But some firms are nervous about losing those valuable employees.

Mr. OWEN PELL (Partner, White and Case): Every law firm strives to go out there and find, you know, the best and the brightest who they want to bring in and they want to develop as associates at their firm.

LEVITT: Owen Pell is a partner at the Manhattan office of the law firm White and Case.

Mr. PELL: These are associates we know. We recruited them, we recruited them hard, we recruited them against other law firms. We were happy that they chose us over other law firms. And we want to invest in them because we want them to come back to us.

LEVITT: So some firms have started to get creative with other ways to lessen the burden on their payrolls temporarily. Many have pushed back the start dates for their incoming first-year associates. Laura Garr is finishing her law degree at Fordham University in New York. She had planned to start with the firm White and Case this fall, when she got this e-mail.

Ms. LAURA GARR: We write to advise you of a development affecting your start date as an associate with us. In an economy such as this one, we have determined that it is in apportion of the fall associate class from our New York, Los Angeles, Washington, D.C. and Palo Alto offices to start with us in the fall of 2010.

LEVITT: Garr's firm and a few others are giving their deferred hires a stipend, generally anywhere from 10 to 75 thousand dollars for taking three months to a little over a year off. But with entry-level corporate lawyer salaries starting at around $160,000, even many of those deferred with stipends have not been thrilled with the situation.

Ms. GARR: For those that always had their heart set on a corporate law firm when they graduated, I know this is a very difficult time, and there are a lot of very unhappy, upset people.

LEVITT: Looming student loans are a big concern. But Garr says many of her colleagues are also nervous about losing valuable face time at their firms. They also worry about having a blank year on their resume right after law school, instead of the on-the-job training and experience they expected. It seems some firms also have this same concern in mind.

Owen Pell's is one of a handful of firms to offer some deferred associates more money if they do legal work for a nonprofit organization during their deferment period.

Mr. PELL: The idea is to put the year to some use, a positive use, not only for society in general, because pro bono organizations need help, but in terms of training and developing these young people as lawyers.

LEVITT: Laura Garr has signed up to spend a year working for an international environmental and human rights group on a class-action lawsuit in Ecuador.

For NPR News, I'm Shia Levitt in New York.

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