Latham to cut 440 jobs as workloads plummet - 27 February 2009

Latham to cut 440 jobs as workloads plummet - 27 February 2009
This is a representative article at this point. Many law firms are now starting to make double digit reductions in staff across the board. This was in response to a 21% decline in profits per equity partner ("PEP") from about $2.3 million to $1.8 million. One wonders whether it is possible to get by these days PEP of $1.8 million. The costs of the six month severance packages is certainly not trivial. The cost of training those let go and the cost of rehiring replacements when times get better, as they most certainly will some day, hopefully sooner than later, when coupled with severance costs, would hardly seem to warrant this sort of reaction given the level of profits per equity partner.

Dow Might Be Down, but Stock of One Law Firm Is Up

Dow Might Be Down, but Stock of One Law Firm Is Up
How could a blog like this one not comment on this article? The interesting story will be when the UK firms start to utilize these new capabilities in 2011, just two years from now. The potential impact of that is shown by some of the analysis of the value of some American firms that appears towards the bottom of the article. Many UK firms have significant foreign presences, including in New York. If these firms can amass capital of the magnitude the article suggests might be possible, the New York competitors of these UK firms will be at a significant disadvantage, if they cannot do the same. Thus, these NY firms will either seek some way to do the same or seek some way to keep the UK firms from employing their public ownership capital in New York. That will not be a complete solution, however, because the capital raised through the UK can still be employed elsewhere around the world and will give the UK firms a decided advantage in those markets.

From the Emerald Isle to Down Under, Firms Tightening Belts

From the Emerald Isle to Down Under, Firms Tightening Belts
This article is interesting not so much because it shows that world economic conditions are infecting Ireland as well, we all sort of knew that already, but it shows, once again, the mobility of the legal work force. As jobs in Ireland decline, Irish lawyers are looking to Australia as an opportunity.

Madoff Victims' Lawyers Establish Global Alliance in Madrid

Madoff Victims' Lawyers Establish Global Alliance in Madrid
This is an interesting approach to global legal services. I would call this a special purpose legal network. It will be interesting to see how well it fulfills its purpose and whether it chooses to go out of bushiness when the purpose is fulfilled. It is hard to tell from the article exactly how closely knit the members will be, and what ethical and other issues might evolve from this special purpose network. This concept is something that bears further watching.

Norton Rose US merger is ‘inevitable’ - 23 February 2009

Norton Rose US merger is ‘inevitable’ - 23 February 2009
The Magic Circle firms have long thought that capital markets work was going to be dominated by either New York or London, but not both. That is why many Magic Circle firms have established very significant presences in New York, but not all have done so through a merger. Many New York firms are doing the same in reverse. It seems clear the Magic Circle firms are planning to be ready to jump one way or the other, depending on how the capital markets work shakes out. This Norton Rose article is cumulative to the conventional wisdom, but its significance is that the current economic climate does not seem to have changed the long term outlook.

DLA Piper shows its mettle in Emea, Asia - 23 February 2009

DLA Piper shows its mettle in Emea, Asia - 23 February 2009
Claiming that its solid performance for 2008 represented the benefits of diversity in both "geography and practice," DLA then moves on to make some significant staffing reductions in the UK and in the US. It will be interesting to see how well geographic and practice diversification can shield DLA from the ravages of the current economic climate. My suspicion is that it will not. Firms with better practice diversity may fare better, but geographic diversity can become very expensive when there is a broad scale downturn in business. It is very hard to defend the continued existence of marginal foreign branch offices in difficult economic times.

Profits Plunge 9.6 Percent at NY Leader

Profits Plunge 9.6 Percent at NY Leader
This article indicates that Shearman's results were more dependant on its business mix than on it global presence. This tends to demonstrate that global firms do not enjoy an advantage from their being global when the economic conditions are themselves global. Rather, it is the practice mix that is more important in determining results. The prior post concerning Cravath's results is more support for this conclusion.