Law firms loath to discuss reductions

The Chicago Tribune reports:

The culture of law firms encompasses many things, including a tradition of not airing dirty laundry or discussing tough decisions such as firing lawyers.

Sonnenschein Nath & Rosenthal, one of Chicago's biggest corporate firms, broke with that tradition Wednesday, acknowledging that the lackluster economy is taking a toll on billings and that it has laid off 124 employees, including 37 attorneys, six of whom are partners.

Most law firms hate to admit the need to downsize to avoid any sign of financial weakness in an intensely competitive industry, and a mass layoff such as Sonnenschein's is even more out of the ordinary.

But over the past decade, the law business has undergone a fundamental change, outgrowing its conservative, clubby ways to engage in some of the most common business practices: mergers, the hiring away of talent and, increasingly, layoffs. Partners are being held to specific profit goals, and those benchmarks are being chronicled in legal magazines, increasing the pressure on firm management to take bold steps such as demoting weaker partners or pushing them out the door.

Firms that need to fire lawyers generally have done so quietly, a few at a time, to avoid headlines. But that practice now is coming under pressure as law firms confront a challenging economic climate that has stunted the financial deals that earn big fees for corporate law firms. Sonnenschein's decision was notable because of the size of the layoff and the details provided by the firm's leaders to its employees.

"We took a hard look at our practice group profitability and the way in which our clients were being affected by the downturn and concluded now was the time to align our workforce with our client need," said Sonnenschein Chairman Elliott Portnoy. "We wanted to do this very openly. We would not attempt to pass this off as performance-based."