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Nationwide Layoff Watch: Sonnenschein Nath & Rosenthal ‘Separates’ 37 Lawyers, 87 Staff

Tuesday, May 27, 2008 7:28 PM - By David Lat

Sonnenschein Nath Rosenthal Above the Law blog.jpgAnother leading law firm has announced lawyer and staff layoffs. Elliott Portnoy, chairman of Sonnenschein Nath & Rosenthal, has confirmed to ATL the personnel changes that were announced to Sonnenschein lawyers and staff earlier today.

“We separated 75 staff and 49 timekeepers,” said Mr. Portnoy, reached by telephone. “Of the 75 staff, 41 are secretaries are 34 are other support staff. Of the 49 timekeepers, 37 are lawyers, and 12 are non-lawyer timekeepers such as paralegals.”

(To put the numbers a different way, the firm laid off 37 lawyers and 87 staff, if the 12 non-lawyer timekeepers are added to the 75 other staff members).

Most but not all of the affected lawyers are associates. According to Mr. Portnoy, of the 37 attorneys, six are partners, four are of counsel, and 27 are associates. The affected associates range from first-year to senior associates, with the reductions “spread pretty widely across the seniority ranges, from junior to senior.”

The separations were also spread across practice groups and offices. “Real estate and litigation were the practices most directly affected,” said Mr. Portnoy. “They’re two of the firm’s largest practices, so numerically this is not surprising.”

More details, after the jump.

The vast majority of the directly affected individuals were notified last week. On Friday afternoon, after the laid-off individuals learned their fates, Elliott Portnoy issued a firm-wide voice mail, announcing implementation of a reduction in force. That voicemail did not provide specifics; it merely notified people of the change, and asked people to be understanding towards and supportive of their affected colleagues.

Today Mr. Portnoy held a series of briefings about the changes with Sonnenschein lawyers and staff: partners, counsel, senior managing directors, staff members, associates, and summer associates. The last of these briefings, with summer associates, concluded around 7 p.m.

“I walked all of our people through what we have been seeing in the industry generally,” said Mr. Portnoy. “Not surprisingly, given the way in which our clients have been directly affected by the economic downturn, there have been changes in their legal needs in a particular set of practice areas.”

“I talked to our people about steps that have been taken by firms that we compete with for clients and talent,” he explained. “Some have done it openly and transparently, and some have not. We were not going to attempt to do this [reduction in force] below the radar. We were going to do this as openly and transparently as we could. We would not attempt to pass this off as performance-based.”

(We commend Sonnenschein for its candor. As we have chronicled in these pages, many firms are taking similar steps to reduce costs and payrolls, but without owning up to what they’re really doing.)

“In litigation and real estate and a handful of smaller practice groups, we concluded we had too many talented people for the level of work expected,” said Mr. Portnoy, in explaining what prompted the layoffs. The separations were made to “align our workforce with our projected client needs. Together these factors drove the decisions that we made.”

The firm did attempt to reduce expenses without reducing its payroll. For example, as previously reported, the firm shortened its summer program. “But even with the savings we achieved, we concluded that our infrastructure was too large for the number of lawyers we presently have,” said Mr. Portnoy.

He debunked the rumor that the cuts were made due to a planned merger with another firm. “There is no imminent merger,” he said. “We are not in active merger negotiations.”

Are further reductions in force on the way? Hopefully not.

“We made very clear today that based on all the information available to us, we fully expect this to be the only set of reductions in force we’re required to make in 2008,” said Mr. Portnoy. “That said, it’s obviously impossible to predict the future. But based on everything we know now, we believe the separation of 37 lawyers from the firm accomplishes the objectives we need to accomplish.”

How will summer associates be affected? “Not at all,” said Mr. Portnoy. “Our summer associates’ jobs are absolutely secure. We fully expect to make offers to summers in the ordinary course.”

And what about the laid-off individuals, whom Mr. Portnoy collectively praised as a talented group?

“We will do everything we can to help the people we have separated, to give them as much support and compassion as we are able to provide,” said Mr. Portnoy. He added that the firm is working with headhunters and search firms, its alumni network, and its clients, to help the affected individuals find new opportunities.

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