Boom times turn bleak for Boston lawyers
Prestigious firms forced to cut jobs, freeze salaries
Paul Semenza practiced law for 25 years, including work as a defense attorney in personal injury cases. So the Wakefield lawyer figured it would take only a few months to find work after losing his law firm job a year ago. But the economy steadily worsened, and no offers came. Now Semenza, 51, has been forced to find a different way to earn a paycheck - by selling sofas and mattresses at a local furniture chain.
"It's very frustrating not being able to do something that I enjoyed for so long," he said. "While I enjoy meeting and helping customers, I really miss the law."
So do lots of other lawyers. After years of giddy growth in Boston's legal industry, the party is over because of the recession. Many of Boston's most prestigious law firms have frozen salaries, slashed bonuses, and cut positions in the past few months. Goodwin Procter eliminated 74 jobs for attorneys and support staff nationwide, Nixon Peabody axed 56 jobs, Goulston & Storrs cut more than 40 jobs, Choate, Hall & Stewart let go 38 people, and Foley Hoag shed more than 30 jobs. In fact, there were so many firms announcing staff reduction on Feb. 12, some lawyers called it "Black Thursday."
"It's pretty bleak," said legal recruiter Linda Kline, managing partner of New England Legal Search Ltd. in Boston.
The downturn marks an entrance into uncharted territory for one of Boston's marquee industries. For years, major law firms consistently reported higher annual revenue and profits and vied with Wall Street for Ivy League law school graduates. Starting salaries for newly minted lawyers at top firms rose from $125,000 in 2005 to $160,000 two years later. And firms had little trouble passing along the cost to clients, who needed lawyers to help handle a growing number of mergers and other key business deals. That's all changed, as demand has slowed and clients look for ways to slash their legal bills.
"It's a big turnaround," said Jim Durham, a Dedham marketing consultant who formerly worked for Ropes & Gray in Boston. "Firms will have to learn to be leaner."
And not every firm is shrinking. For instance, those specializing in employment law could see demand rise as companies seek to stave off lawsuits from former employees. Ogletree, Deakins, Nash, Smoak & Stewart, an employment and labor law firm, just opened a new office on Boston last month with six attorneys and three other employees. Also, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, which has a Boston office, has hired a half-dozen lawyers in the past few months in its employment practice around the country.
In addition, demand has increased for lawyers with experience handling bankruptcies, foreclosures, and patent litigation, according to a legal staffing firm.
"In tough times there is less money, but people fight over money more," said Chip Fierimonte, division director for Robert Half Legal in Boston.
Indeed, Luke Silva, 30, who passed the bar last year and finished an internship in January, quickly landed a job at Lowrie Lando & Anastasi, a Cambridge intellectual property law firm that is continuing to expand. "I feel very fortunate," Silva said.
Still, demand overall has slowed, mostly because businesses are reducing the amount of money they spend on legal services. That, in turn, could pressure law firms to offer discounts on their hourly rates or come up with more creative ways to bill customers.
"The business model will be threatened a little bit," said Durham, the Dedham consultant. "Unfortunately for lawyers, there are lots of good lawyers, so [clients] can probably find someone who costs less."
Aside from lowering their rates, some law firms are making other changes to keep clients.
For instance, Boston-based Foley Hoag recently created an economic crisis team and another team to help business clients win a slice of the federal stimulus package. Goulston & Storrs created a distressed-debt group to assist clients in buying troubled assets. The firm also stepped up sending bulletins to clients with advice on legal developments.
"People are looking at all sorts of ways to restructure," said Valerie Yarashus, president-elect for the Massachusetts Bar Association. The bar association is also sponsoring workshops to help members weather the downturn, she said.
Rachel Hayes, another legal consultant, thought the downturn could hurt Boston's biggest law firms the most because they may not be able to make adjustments as quickly as smaller and midsize firms.
"The mega-firms are challenged," said Hayes, a vice president at the Wellesley Hills Group in Framingham, a management consulting firm.
Semenza - the lawyer turned furniture salesman - said he hasn't given up finding another legal job. He constantly chats people up to see if they have connections that might lead to an opportunity. But everywhere he's looked, he has been told no one is hiring. It's a common refrain.
"The economy overall is pretty grim," said Debbie Huang, 29, a litigation attorney who was laid off from Foley Hoag in January. "I think the market is saturated with people with very similar backgrounds."
Since she got laid off, Huang said, she's been networking and looking for other avenues to find work. But she's mostly avoided talking to other laid-off lawyers to avoid getting discouraged.
Despite the grim employment outlook, however, some out-of-work attorneys remain optimistic they will rebound.
"I can survive even if it takes a few months" to find work, said Paul Kitchin, an intellectual property litigator who was laid off from Bromberg & Sunstein in Boston in January. "I don't have to be desperate."
Todd Wallack can be reached at twallack@globe.com.
(Correction: The original version of this story had the incorrect date for "Black Thursday.")
