Despite Stronger Demand, Calif. Firms Could Be Facing Layoffs

By Rebecca Cohen, The Recorder

A nationwide dropoff in demand hasn't hit California law firms as hard as those in other parts of the country. But that doesn't mean firms here are immune from downsizing, some industry observers say, particularly after many firms raised first-year associate salaries to $180,000 this summer.

A report from Wells Fargo Private Bank last month became the latest of several to indicate that even the most profitable tier of the market is seeing demand soften. It also showed increased expenses at firms, which are only expected to grow in the wake of the latest round of salary increases. Jeffrey Grossman, a senior director at Wells Fargo Private Bank, told The American Lawyer that layoffs could be on the horizon.

Rate-sensitive practices are especially at risk for cuts, said Carol Morganstern, managing director of legal recruiter Major, Lindsey & Africa's partner practice group in Northern California. She's seeing less demand for intellectual property litigation at high-rate levels, and she thinks the current rates for mortgage work don't make sense, either.

That being said, Morganstern hasn't heard her clients talking about large-scale layoffs. Due to firms' concerns about the PR message that layoffs can send, it's more likely that underperforming attorneys will be managed out one by one, she said.

"I think you're seeing senior associates not making partner or being asked to leave," she said. "We see a lot of those people looking for in-house jobs. It's also senior partners whose practices have just fallen off."

Read more of this article at The Recorder.


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