Patton Boggs and BigLaw

March 2nd, 2013 / By Deborah J. Merritt

The BigLaw firm Patton Boggs announced yesterday that it was laying off 30 attorneys and 35 other staff members. The laid off lawyers were all associates or staff attorneys, but about eighteen partners have been notified that they should improve performance or find other work. With 485 lawyers on board, the lay-offs amounted to 6.2% of the firm’s legal talent. If the eighteen partners also depart, that would be a cutback of 9.9%.

According to the firm’s managing partner, Edward Newberry, the staff gave him a standing ovation after he announced the cuts. Those staff agreed that the firm was taking the right steps to make it “a great competitor in a very difficult legal market place.” Indeed, even as it cuts some attorneys and staff, the firm will move forward in other ways. It is opening an office in Dubai, moving support functions to a less expensive office in Northern Virginia, refurbishing the DC office, and looking to open an office in Houston.

The Patton Boggs announcement seems to mirror predictions published in a January report from Georgetown’s Center for the Study of the Legal Profession. The report was written by James W. Jones, a Senior Fellow at Georgetown who previously served as managing partner at Arnold & Porter, Vice President and General Counsel of APCO Worldwide, and Managing Director of Hildebrandt International. Georgetown’s Mitt Regan, the McDevitt Professor of Jurisprudence and well known expert on the legal profession, contributed. Jones, Regan, and the rest of their team know a lot about the legal profession–and they built this report on real data collected from firms.

The sobering conclusion of this report, presented in the opening lines, is: “At this point, it is becoming increasingly apparent that the market for legal services in the United States and throughout the world has changed in fundamental ways and that, even as we work our way out of the economic doldrums, the practice of law going forward is likely to be starkly different than in the pre-2008 era.” The authors are so confident of these differences that they urge law firms to “burn the ships,” to force themselves to adopt new, more profitable ways of doing business. (p. 1)

Does “burning the ships” mean laying off lawyers and staff, as Patton Boggs did? Indeed it does. The Georgetown report warns that, despite “several rounds of lay-offs” since 2008, many firms still suffer from “overcapacity in terms of the number of lawyers available to perform the work at hand.” Indeed, “the overcapacity problem has become even more serious” over the last four years. (p. 16) The solution, for firms that want to maintain high levels of profitability, is to continue cutting both associates and partners.

In addition to trimming lawyers, law firms are learning to hire new lawyers in lower-paid and more contingent positions. As the Georgetown report recognizes: “Firms have . . . begun to move toward more flexible staffing models, expanding their use of non-partner track associates, staff attorneys, and contract lawyers. Going forward, it is likely that firms will remain conservative in their hiring policies, even as demand begins to grow. As a result, firms probably will be relatively smaller in terms of the number of partners and traditional partner-track associates and relatively larger in terms of the number of other lawyers and non-lawyer professionals.” (p. 16)

Firms have been able to pursue this course because the legal market is flooded with law school graduates eager to work on almost any terms. The Georgetown report is quite candid on this point: “While excess capacity in the [legal] market is certainly not good news for young lawyers or, for that matter, law schools, it provides an environment in which law firms should have the flexibility to redesign their staffing models to respond to client demands. By embracing alternative approaches to staffing–including increased use of staff attorneys and non-partner track associates, contract lawyers, and part-time attorneys–firms can create more efficient and cost effective ways to deliver legal services.” (p. 17)

The Patton Boggs layoffs, in other words, are likely to be the first of many further contractions in BigLaw. Other firms may not lay off lawyers; they may reduce further the number of associates they hire, or quietly shift toward hiring staff attorneys and contract lawyers rather than partner-track associates. One way or another, however, firms will remedy the “overcapacity” identified in the Georgetown report.

For those who have been waiting for the golden days of BigLaw to return, the wait is over. There will still be golden times for some lawyers in BigLaw, but the opportunities are narrowing. Four years after the recession hit the legal market, structural changes continue to reduce BigLaw prospects for lawyers of all ages.

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