NEW YORK – In a sign that the financial challenges buffeting the law industry continue unabated, two major U.S. firms are facing significant staff reductions.
Weil Gotshal & Manges, one of the world's most prominent firms, said on Monday it would lay off 60 associate lawyers and 110 support staff.
Meanwhile, Patton Boggs, a Washington, D.C.-based firm known best for its lobbying practice, confirmed that 17 of its partners announced last week they would be departing.
The moves come as many law firms have reduced staff levels in the wake of the financial crisis, with demand softening and corporate clients pushing for lower fees.
The 1,200-lawyer Weil Gotshal, based in New York, announced the layoffs in a memo to its staff on Monday, saying that the "new normal" for the legal services market had forced its hand. In addition to the layoffs, the firm said it would cut compensation for some of its partners.
"It appears that the market for premium legal services is continuing to shrink," Weil's executive partner, Barry Wolf, wrote in the email, which the firm provided to Reuters. The firm did not comment beyond the memo.
Weil had been largely insulated from such pressures thanks in part to its robust bankruptcy practice. Most notably, the firm guided Lehman Brothers through its 3-1/2-year restructuring, yielding hundreds of millions of dollars in fees.
In the memo on Monday, Wolf emphasized that Weil has no outstanding debt, a fully funded partner pension plan and virtually no compensation guarantees.
Those were some of the factors that led to the demise of Dewey & LeBoeuf, another large firm that filed for bankruptcy in 2012 after cutting partner pay in an effort to escape a crushing debt load.
The Patton Boggs' move comes three months after the firm laid off more than 60 staff members, including 30 attorneys.
The firm said in a statement, "Movements of this kind are a regular occurrence in an industry where the competitive environment has changed, and many leading firms are transitioning their work forces to compete more effectively."
Peter Zeughauser, a law firm consultant, said firms are likely to keep cutting costs, as corporate clients continue to turn to less-expensive options for basic legal services like in-house attorneys and outside consultants.
"The client pressure is unrelenting, and it's going to bring about further change," he said.
Last year, Weil generated more than $1.2 billion in gross revenue and about $2.2 million in profits per partner, according to The American Lawyer magazine.
The smaller Patton Boggs, which has about 500 lawyers, recorded $317.5 million in revenues and $735,000 in profits per partner in 2012.
(Reporting by Joseph Ax; Editing by Ted Botha, Bernard Orr)