Two Chicago law firms fired attorneys this week, and more layoffs loom as firms retrench in the face of financial tumult hitting their corporate clients.
Sonnenschein Nath & Rosenthal let go of about 24 lawyers out of 680, the second round of dismissals this year, and Katten Muchin Rosenman laid off 21 out of 650, the firms confirmed Thursday.
Mass layoffs are rare in the legal industry. But in the past year they have happened more frequently at firms nationwide. Outside Chicago, firms announcing cuts in recent months have included Clifford Chance, Cadwalader, Wickersham & Taft and Thacher Proffitt & Wood.
The economic downturn caused by the credit crunch have stunted financial deals that earn big fees for corporate law firms. Even the number of new business-related lawsuits has fallen for the past two years.
Tumult in the financial markets is affecting our clients and dramatically reshaping the contours of the transactional, finance, restructuring and litigation work in the financial services sector,” Sonnenschein Chairman Elliott Portnoy told colleagues by e-mail.
With signs that the economic woes could last awhile, legal recruiters expect more downsizing. “My big question is who’s next,” said Kay Hoppe, a Chicago legal consultant. “Firms are making a big effort to cut costs.”
Lawyers who have not made partner are the most vulnerable to losing their jobs. Salaries for so-called associates rose rapidly in recent years but now firms don’t have enough work to keep them busy.