Analysis

Law Firm Staff Face Uncertain Future Post-Lockdown

By Xiumei Dong
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Law360 (May 13, 2020, 4:44 PM EDT) -- As the legal industry scrambles to adjust to the "new normal" caused by COVID-19, the pandemic could spur law firms to rethink their long-term needs when it comes to professional staff, whose roles have transformed dramatically over the past two decades but have so far shouldered the brunt of virus-related layoffs.

Before COVID-19 hit, many firms were growing their teams of such personnel and giving them more responsibilities, but when the unexpected economic downturn forced firms to make cost cuts, nonattorney staff were the first to be on the chopping block.

As firms continue to navigate these uncertain times, some may come up with lasting staff structures that allow for efficient legal services with less supporting staff, industry experts said.

"Law firms have found really sophisticated ways to make professional staff timekeepers because the value they contribute is immense," said Dustin Laws, managing director in Major Lindsey & Africa's law firm management practice.

"But at the end of the day, the primary streams of revenue for the firm are their practitioners, their attorneys," Laws said. "So when a firm thinks of immediate ways to cut costs, unfortunately, the professional staff are the first to be placed under the microscope."

For example, McDermott Will & Emery LLP, whose gross revenue rose to $1.17 billion last year, decided in late April to lay off and furlough some professional staff as it tries to weather the economic impact of the pandemic. The firm declined to comment on the extent of the layoffs.

Goodwin Procter LLP made a similar move in early April. The Boston-founded firm, which saw revenue rise to $1.33 billion in 2019, confirmed that it trimmed down its global operations team. According to a report by Above the Law, tipsters reckoned about 50 staff members were let go by the firm.

"We recently reviewed the performance and size of our global operations team given the current and anticipated effects of the coronavirus pandemic on the global economy," a Goodwin spokesperson said in a statement on April 10. "As a result of our analysis, we made the difficult decision to ask a limited number of our global operations team members to leave the firm."

In the U.K., a recent study by the Institute of Legal Finance & Management and accountancy firm Saffery Champness found that about 77% of law firms are looking into furloughing staff because of the pandemic. Among those firms, most are looking at no more than a 40% reduction in their workforce, the study found.

While it is common for larger firms to have extra people or resources around when the economy is going strong, the downturn gives the firms a good reason to cut those staff in order to save costs, said Frank Gillman, a former BigLaw chief information officer who now works at consulting firm Vertex Advisors.

"What are the two biggest cost centers for any law firm? One is real estate, the space, and the other is personnel, right?" Gillman said. "This new work model is forcing firms to look at other ways to do things."

Gillman said the pandemic has pushed firms to look at how they can streamline their legal operations and minimize costs.

"Firms that are looking to lower their costs, they're clearly going to look at nonrevenue targets first, before they look at revenue targets," he said.

Although many firms have indicated they'll bring back affected staff members to some extent once the pandemic is over, some staff are worrying that their firms could ultimately decide to eliminate their roles.

"My fear is that they are going to learn that they can get the same amount of production with less staff, which would not be good for me and my co-workers," said an accounting staffer who recently got laid off from Goldberg Segalla LLP.

The Buffalo, New York-based firm has told laid-off workers that it would bring them back, but so far no time frame has been given, said the staffer, who spoke on condition of anonymity.

"With courts being closed and social distancing forcing less depositions and such, I can't even predict when they might call us back if at all," the staffer said.

Goldberg Segalla declined to comment Wednesday.

However, not everyone is pessimistic about the future. According to Laws, the lack of staff members during the pandemic lockdown could make the firm realize the importance of other functions that are supporting the firm's operations.

"End of the day, I think the professional staff that are left and the ones who are eventually brought back to the firms are going to need to work even closer to the attorneys to get things done," Laws said.

Gillman, on the other hand, said he thinks the limited access to support could make attorneys more self-sufficient, tackling tasks such as helping clients with fee requests and adjustments.

"I don't think it's something that law firms necessarily want to do because they're very loyal and appreciative of all the people that have helped get them where they are," Gillman said. "The pandemic is just accelerating that change."

--Editing by Aaron Pelc.

For a reprint of this article, please contact reprints@law360.com.

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