Biglaw, Layoffs, Partner Issues, Partner Profits, Secretaries / Administrative Assistants, Staff Layoffs

Staff Layoff Watch: Bingham McCutchen Makes Cuts

Are staff layoffs at large law firms on the upswing? Bingham McCutchen just announced some cuts. How many individuals were affected, and what was the rationale for the reductions?

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We’re getting the sense, based on anecdotal evidence showing up in our inbox, that law firms are quietly making cuts to the ranks of attorneys and staff. They’re doing so somewhat stealthily, however — in dribs and drabs, spread out over decent stretches of time, often invoking performance reasons. So we’re having a hard time obtaining enough information on any one firm to issue a report.

We need your help in keeping law firms honest. If you have layoff news to report, please send it our way, by email or by text message (646-820-8477 / 646-820-TIPS). As you’ve probably already noticed, we do not name our sources.

One firm that’s being commendably upfront about its reductions is Bingham McCutchen. This afternoon, the firm announced some staff layoffs….

We started to hear rumblings about Bingham layoffs yesterday. Today the firm announced the news internally, in a firm-wide email sent out by L. Tracee Whitley, deputy chief operating officer. (That email is reprinted in full on the next page.)

Here’s the core of the announcement:

I am writing to let all of you to know that we conducted a reduction in force of our staff this week. We eliminated 42 positions across our U.S. offices, with the predominant impact being felt in Boston, as it is our largest office globally and our administrative headquarters. All of the staff members affected by this reduction will be receiving severance packages commensurate with their tenure and position level.

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Sources have informed us that affected areas include the secretarial, administrative, and accounting/finance departments. Since Bingham has about 1,000 support staff members firm-wide, 42 positions comes to about 4 percent of total headcount.

What prompted the cuts? From the memo:

This action was undertaken after extensive and thoughtful review of our staffing levels in comparison to those of our competitor firms. We regularly undertake such analyses as part of our business planning to maintain proper balance between the ranks of our lawyers and staff.

Bingham is not alone in this approach. As you can see from our collected coverage of staff layoffs, in the past few months at least five Biglaw firms have announced cuts to support staff, generally citing “right-size” rationales.

Earlier this month, Am Law Daily covered Bingham’s 2011 financial performance:

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For Bingham McCutchen, a seemingly endless growth streak has finally come to an end.

After 15 consecutive years of topline gains, Bingham’s gross revenue dipped 0.5 percent to $868.5 million in 2011, according to reporting by The American Lawyer. That figure is still the second-highest in firm history and offset somewhat by record highs in revenue per lawyer, net income, and profits per partner.

Despite the drop in gross revenue, Bingham’s net income rose almost 4 percent to $277.5 million last year. That helped drive a 5.5 percent increase in average profits per partner to roughly $1.72 million. Revenue per lawyer, meanwhile, grew 4.6 percent to approximately $1.02 million, while the firm’s profit margin inched up from 31 to 32 percent.

Bingham is doing very well for itself; PPP of $1.7 million and RPL of $1 million are impressive figures. And some offices are doing even better. Over on the other side of the pond, the firm’s London office reported a 14 percent revenue increase, with RPL over $1.1 million.

But if Bingham wants to maintain such performance, it must learn how to do more with less — just like pretty much any business out there, legal or otherwise. Viewed against the larger competitive landscape, cost cutting measures are understandable.

Understandable, yes — but still unfortunate and difficult for the affected individuals. Good luck to all of the Bingham staffers who will be seeking new employment.

(You can view the complete Bingham memorandum about the staff layoffs on the next page.)

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