These Biglaw Firms Benefitted From Their COVID Layoffs
They cut employees last year and emerged stronger than ever.
If you think Biglaw firms that made layoffs in the middle of the pandemic were showing some economic weakness, well, that theory has been thoroughly disproven. According to an illuminating report by Law.com, 15 Biglaw firms saw significant upticks in revenue or profit — we are talking 5 percent or more — after they conducted layoffs of staff and/or attorneys as the COVID-19 pandemic raged. Here’s a look at what happened at some Am Law 200 firms that cut positions and still came out on top.
Back in April of 2020 Akerman laid off both staff and attorneys. They saw record revenue in 2020, up 6.5 percent to $467.4 million. In a statement about this dichotomy, a spokesperson chalked in up to uncertainty in the market and “careful expense management”:
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“Like many firms, we made business decisions early in the pandemic to confront the uncertainties facing the legal industry,” a law firm spokesperson said in an email. “Akerman’s success in 2020 is a direct result of our team’s phenomenal work for clients across numerous practice areas and sectors within the United States and internationally, as well as careful expense management.”
Billion-dollar firm Reed Smith had a banner 2020, with profits per equity partner up 15.9 percent and revenue up by 5.1 percent. It also axed 19 jobs from its London office. Global managing partner Sandy Thomas said of the lost jobs:
“We don’t like that, of course, but you do have to reconcile the ongoing needs of the shape of the business with where you are in any particular point in time.”
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Hogan Lovells announced a 4 percent reduction in staff in the United States and Mexico in October. During that same period, the firm saw a 2.8 percent uptick in gross revenue. And profits per equity partner for last year are way up — by 30.8 percent, though that was assisted by a 23 percent decrease in the firm’s equity partner ranks. But the firm has pointed to the potential for more challenging times ahead:
A firm representative pointed to CEO Miguel Zaldivar’s statement in October, when he said the firm has “performed well over the past few months” and was ahead on revenue. “However, we see continuing uncertainties in the market for 2021 and need to be well-positioned to weather what could be a more challenging period,” Zaldivar said at the time.
Procopio, Cory, Hargreaves & Savitch:
Procopio, Cory, Hargreaves & Savitch cut its workforce by 13 percent last year. They also saw an increase in revenue of 7.6 percent and partner profits were up by 24.8 percent. But chief operating officer James Perkins says a hefty chunk of the increase in net income was from a PPP loan, which they anticipate will be forgiven. On balance, firm leaders say those they cut were not missed:
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“It’s something we needed to do to weather the storm. We took those three steps pretty quickly, before many of our peers, and then when we were approved for the PPP funds, we equalized it all,” said Perkins, referring to the firm reversing pay cuts and hourly restrictions and hiring a few people back.
….
“We did hire a couple [staffers] back later in the year, but on balance we didn’t bring anyone else back,” said Perkins, the COO. “I hate to say this but we didn’t really miss them, and that’s what we’ve seen in the use of our technology, to allow our ratios to grow of attorneys to staff.”
McDermott conducted layoffs to both the staff and attorney ranks in 2020. But, wow they had an amazing year — up a whopping 17.9 percent in gross revenue which translated to a 25.6 percent bump in profits per equity partner. Firm chair Ira Coleman characterized the cuts as part of a “moderated approach” and said the firm didn’t do any “big things.” Hmmm, tell that to the folks that lost their jobs mid-pandemic.
“You run the business based on the information you have at the time. When times get tough, you focus on everything a little closer, you trim expenses, you don’t do any riffs or big things,” chairman Ira Coleman said in a statement. “We took a very moderated approach. We knew partners were going to bear the risk of the year whether it turned out to be a good or bad year.”
Dickinson Wright cut its workforce by 3 percent last year, despite a 2.9 percent hike in revenue with a corresponding 14.9 percent increase in profits per partner. Dickinson CEO Michael Hammer said the pandemic was an “opportunity” for the firm. “It really was an opportunity to address some of those underperformance and overcapacity issues most firms have,” he went on:
“When you are looking into a sea of uncertainty, we know we have these people we have been carrying along and can address it in a humane, transparent way, and then we don’t do any more cuts,” said Hammer… “We didn’t want to get to a point where we were making cuts on people we need for economics’ sake.”
Davis Wright Tremaine increased gross revenue by 7.5 percent and profits per equity partner by 8.7 percent. But in September, the firm announced that furloughs would become layoffs for some staff members. The firm’s managing partner said the elimination of those positions were not part of cost-cutting measures:
“The layoffs were not a cost-cutting measure,” said Jeff Gray, managing partner, in a statement. “They were due to a fundamental shift in how we expect to operate and support our clients and lawyers going forward. We had already started looking at those changes. It involves an assessment of our staff structure and what kind of roles and capabilities we need to best support our clients and lawyers.”
Saul Ewing laid off attorneys and staff last year, and saw profits per partner increase by 14.4 percent. Managing partner Barry Levin said the cuts were made “in anticipation of reduced and evolving client needs.”
“There has been a shift from the traditional lawyer-secretary-paralegal model to having all kinds of other nonlawyer professionals who can provide really important insights that benefit client relationships in terms of project management and pricing experts,” Levin said last month.
Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).
