The Am Law Daily
Law firm layoff news ran rampant this week overseas, with Allen & Overy, DLA Piper, and Eversheds all confirming office closures and other structural overhauls affecting lawyers and staff.
At Eversheds, up to 166 positions worldwide—made up of 82 lawyers, including partners, as well as 84 staff—could be eliminated as part of a new three-year strategic plan, according to a statement from the firm.
The cuts come as Eversheds, which does not have any offices in the United States, shuffles management in Asia, closes its Denmark office, and changes the way it structures business functions in the United Kingdom. The firm’s real estate practice, among others, is also being closely scrutinized. “Our view is that some markets in which we operate have undergone fundamental change, rendering our current structure unsustainable,” Eversheds chief executive Bryan Hughes said in the statement.
Allen & Overy, meanwhile, is ramping up efforts to outsource support services to a back office in Belfast. A total of 43 roles will move to the Northern Ireland city, including positions currently held by employees in the U.S. and in European offices such as Amsterdam, Brussels, Frankfurt, and Paris. The firm said in a release that it will offer relocation packages to those affected, and that no lawyers are included in the changes.
The firm’s Belfast operation, which launched in fall 2011, is akin to those of U.S. firms including Orrick, Herrington & Sutcliffe’s Wheeling, West Virginia, back office; Pillsbury Winthrop Shaw Pittman’s Nashville location; and Bingham McCutchen’s soon-to-open Lexington office.
“With low economic growth across many developed markets, we must ensure we are operating in a way that will deliver the cost efficiencies our clients expect of us, so that we may protect the long-term competitiveness of our business,” Wim Dejonghe, the global managing partner for Allen & Overy, said in a statement.
Lastly, a DLA Piper spokesperson confirmed reports in the British legal press that the firm is closing its Glasgow office, shedding its insurance defense practice, and consolidating its document production unit. Of the 85 people currently in Glasgow, 45 jobs will be lost, according to the firm.
The changes are similar to efforts being made by Am Law 200 firms, says Zeughauser Group consultant Kent Zimmermann, though so far in 2013 none domestically have garnered such high-profile attention.
“These are not outliers. They’re not anomalies,” Zimmerman says of the recent layoffs. “It is something that’s happening quietly in many, many firms in the industry.” Zimmermann says he’s spoken with three managing partners of major firms in the past week, each of whom said they plan to make cuts in the first half of the year. (He declined to identify the three firms.)
With so many staff and associate reductions made over the past few years in an attempt to cut costs during the recession, Zimmermann says that he thinks the next round of layoffs will more negatively affect partners.
The American Lawyer’s most recent survey of law firm leaders, published in November, backed up that sentiment. Among the respondents, 45.5 percent said they had deequitized partners in the past year, which is often the first step toward asking a partner to leave. Roughly the same percent said they expected to do so in 2013.
Staffs were certainly not immune from layoffs over the past year. Dorsey & Whitney, for instance, trimmed 20 support staff from its ranks last summer, while Greenberg Traurig laid off staff to achieve a four-to-one attorney-to-secretary ratio, according to sibling publication the Daily Business Review.
Reuters reported in August on staff layoffs at Fish & Richardson and Fulbright & Jaworski, the latter of which was announced in a November merger with London-based legal giant Norton Rose. Legal blog Above the Law also noted potential stealth layoffs at Dickstein Shapiro and Winston & Strawn.
A few Am Law 200 firms also decided to shut offices last year, either as the result of partner losses or a strategic shift away from a given market. Baker & McKenzie announced the closure of its San Diego office in March; Pillsbury Winthrop Shaw Pittman exited the Orange County, California, market in June; and Nixon Peabody closed its Paris office in December. (The news wasn’t all bad, however; The Am Law Daily has covered dozens of office openings in the past year.)
The collection of changes, in Zimmermann’s opinion, all point to a similar cause: “As pricing pressure from clients continues, firms have become less tolerant of chronically underperforming lawyers, practice areas, and offices. That’s resulting in more cuts.”
Brian Baxter contributed reporting.
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