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VOL. 125 | NO. 30 | Monday, February 15, 2010

The Business of Law

A quiet economic recovery for an image-conscious – and tight-lipped – industry

By Rebekah Hearn

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Andy Branham's firm, Counsel on Call, provides legal staff and resources for law firms and corporate legal departments nationwide. Photo: Lance Murphey

As many sectors of the economy slowly sputter back to life, the state of the legal industry is often overlooked in economic reports. This trend can be surprising because law firms and corporate legal departments provide the advice and representation necessary for many different kinds of businesses to move forward with their recovery.

When a large corporatation lays off multiple workers, its legal department usually has written the company’s book on how to do so without violating rights. When a business is created, an attorney often will help the owner get it off the ground. When financial institutions are accused of wrongdoing, it’s the lawyers who fight the battle.

“We do help people through rough patches. We're kind of the first call people make when they're in the tight.”

– Andrew Branham
Executive director, Counsel on Call

LawSchucks.com, a legal Web site and blog, has tracked legal layoffs since they began happening early in the recession. In 2009, the tracker reported 12,196 people laid off by major firms, of which 4,633 were attorneys and 7,653 were other staff. The year-end report noted that “layoffs are severely underreported, a trend that increased as the year went on.”

Overall, LawSchucks.com tracked 218 reports of layoffs at 138 firms last year.

So how is the business of law faring locally in these tentative times? The Memphis Bar Association doesn’t keep official numbers on laid-off attorneys, so no specific data on local layoffs were available.

However, it appears many Memphis attorneys have been lucky. The number of announced layoffs here was not high in 2009, firms have not been forced to shutter (although some smaller firms merged into larger ones) and a good foundation for pro bono legal services has helped many unemployed attorneys keep their skills sharp.

Also, companies such as Counsel on Call, a Nashville-based group with a local presence, has opened its doors to laid-off attorneys or recent graduates having difficulty landing jobs. By offering a variety of part-time, temporary and project work, Counsel on Call has helped numerous attorneys keep their feet wet during dry times.

Friends in high places

Counsel on Call was formed about 10 years ago by a female attorney in Nashville who was trying to keep up with her busy litigation practice while raising a family. The group provides a platform for alternatives to full-time practice and has grown to include offices in Memphis, Atlanta, Boston and Chicago.

Executive director Andrew Branham is in the company’s Memphis office and has been involved from the beginning.

“We can help people who are great lawyers but just want to do something different,” said Branham, who has been in practice since 1981 in nearly every capacity.

He clerked for a federal judge after graduating with a juris doctorate degree from the University of Memphis, then went into private practice. After that, Branham worked as in-house attorney for Memphis-based International Paper Co.

Not long after his stint at IP, he joined his friends in forming Counsel on Call.

Although Counsel on Call has been open for years and its staff has always focused on offering attorneys alternatives to full-time work, the recession has brought a new clientele.

“We do help people through rough patches,” Branham said. “We’re kind of the first call people make when they’re in the tight. They may call and say, ‘Well, here’s what’s going on with me; I need to get my feet back under me. What’s going on? What’s happening out there? What’s my next step?’"

Branham emphasized Counsel on Call “is not a headhunter” firm.

“We don’t do a lot of full-time staffing,” he said. “Some clients will ask us to, and we can accommodate them, but that’s not our business model.”

With a full-time staff of three people in the Memphis office and a go-to list of 150 to 200 attorneys in the area, Counsel on Call is able to outsource work to cities where it doesn’t have offices, such as Dallas, Washington, D.C., and Charlotte and Raleigh, N.C. Nationally, Counsel on Call has a rotating list of close to 1,000 candidates available for work.

“We can help people who are really great lawyers … and help a company get some really good legal advice at a cost that would be less than filling a full-time position,” Branham said.

Bass, Berry & Sims associates Annie Christoff, from left, Robert McDaniel, Amy Worrell, Ryan Baker and Sehrish Siddiqui meet in the law library of the firm's Memphis branch. Photo: Lance Murphey

As an example, he mentioned two attorneys who work for a major local hospital. Each works 20 hours a week, providing the hospital with the equivalent of a full-time lawyer. Both attorneys are mothers with young children.

“We’ll talk to anybody if they want to come in,” Branham said. “We’ve had companies contact us in some of our other, bigger markets, especially Atlanta, and we act as outplacement; if (a firm) is going to lay off 15 associates, they’ll lay them off, send them to us, we’ll do an interview with them (and) help them evaluate what their job needs are.

"We’ll do some employment counseling with them, help them get their resumes together, things like that. It’s not our core business, but it’s something we’re capable of doing because we talk to so many people and we know the job market so well.”

Another local group, specifically formed to help laid-off attorneys, is Memphis Legal Placement Inc., a division of the Memphis Bar Association. MLP has been operating since 1984 and works to match law firms and corporate legal departments with qualified attorneys.

In June, MLP launched its Attorney Career Center Web site. Unlike MLP’s basic service, which charges employers a fee to place a job availability ad, the Career Center site is free.

Two days after the MBA launched the Career Center, the site had recorded 381 hits.

MBA Executive Director Anne Fritz and MLP President Mary Lynes put their heads together after the National Association for Bar Executives Conference in 2009, and the result was the Career Center Web site.

Attorneys who are MBA members can post their resumes for free, and employers also can post job openings at no cost. The site also lets job-seeking attorneys remain anonymous by allowing them to post a summary of their qualifications.

MLP has picked up the past few months, and that’s really more for secretaries, paralegals, that kind of thing,” Fritz said. “We’re starting to see some more temporary placements, which I think is an indicator that before people start to hire permanent people again, they might start hiring temps.

“I’m cautiously optimistic that we may be past the worst of it, because we are seeing some pickup in temporary work. So I’m hoping that’s a harbinger of better times to come.”

Finding ways to save

Branham acknowledged he's seen a small downturn in his business as corporate legal departments and law firms have spent less on outside vendors.

How Law Students are Faring

“Now is not a good time to enter law school (or) take on a lot of debt, as you can imagine,” said one second-year law student at the University of Memphis Cecil C. Humphreys School of Law.
Many students who anticipated having jobs in the bank on graduation now are faced with a dramatically different economic landscape.
Law school Dean Kevin H. Smith said the school tracks its graduates’ job success rates by gathering information upon graduation and following up again in nine months. The nine-month data from the 2009 class will be gathered in a month or so, he said.
“Up to this point, we have continued to be above the national average … for job placement rate,” Smith said. “But I do think that paid positions (and) paid summer clerkships are becoming a little bit more difficult to obtain. I think the competition’s a little tighter.”
The second-year law student, who did not wish to be named, told The Memphis News firms that conduct on-campus interviews have not had as many open positions, not to mention that graduates are competing with more experienced attorneys for the few spots that do exist.
“Paying summer jobs are hard to come by, but unpaid internships ... are more within reach,” the student said. “More students are willing to work for free in the summers.”
The U of M law school’s placement director retired at the end of 2009, so Smith has been acting as placement director until the position is filled. He said he also is aware of firms that are hiring fewer long-term associates than normal.
Smith and the law student both noted that pro bono work has become a good stepping stone for graduates.
“It keeps you in the legal world and in contact with people who may know who’s hiring,” the student said. Despite the economic troubles, “there are also plenty of people who had summer jobs, got great offers and will go to work for firms next year.”

“They’re trying to make more inside; make versus buy, is what they call it,” he said.

It's that belt-tightening that has helped keep Memphis’ legal industry more or less whole. Few local law offices laid off workers, and only one firm, Bass Berry & Sims PLC, made a public announcement in June when it laid off 32 employees – six of them in the Memphis office.

“That was the one (layoff) that really hit the papers,” Branham said.

He mentioned another large firm with a Memphis presence that laid off attorneys, although silently. The Memphis News was not able to confirm if these layoffs took place.

“The smaller firms – people just made less money,” he said. “You’ve got partners and they share in the pie and there are not that many associates to feed, so you just make less money. The mid-size law firms … just tightened their belts, and that’s part of being a businessperson. Memphis wasn’t whacked by it quite so badly as a lot of markets were.”

MBA immediate past president Art Quinn said he also noticed firms cutting down on extraneous costs.

“We noticed that it seems like the corporate legal departments and even some larger firms did their own (continuing legal education courses), and I would guess that was done as convenience and as a cost-cutting measure,” Quinn said. “The bar has one out-of-town CLE, the Bench Bar Conference, that we conduct every May, and our attendance (last year) was a little off there. We weren’t disappointed because we thought it might hurt even worse. But what we found was that larger firms were not paying for out-of-town travel for the associates, that kind of thing.”

Fritz said she’s observed firms hiring fewer support staff, a trend that has picked up in the past two or so years. Whereas firms, especially the larger ones, used to have one administrative assistant for every one or two attorneys, now a single secretary may work for four or five different attorneys.

Quinn said during his presidency, the MBA had braced itself for a dropoff in membership – and, as a result, annual dues – but that didn't happen. "On the contrary, I think we may even have grown some in terms of our dues revenue,” he said.

University of Memphis Law School students listen to a proposal to spend spring break in Miami, helping run a legal clinic to help Haitian refugees. Photo: Lance Murphey

At the beginning of what appeared to be a widespread layoff tsunami, Branham said he and Linda Warren Seely, director of pro bono projects at Memphis Area Legal Services Inc., talked about creating a service called the Tennessee Attorneys’ Network through the Tennessee Bar Association to help lawyers who lost their jobs.

“But by the time we sort of got all the pieces together, it just seemed like the ship had righted itself, and everybody was OK. So they really didn’t need the outplacement help,” Branham said.

Working the hurdles

Knowing the local job market is key to the survival of a company like Counsel on Call.

Branham has kept a close eye on local layoffs in the legal profession since mid-2008, and he, like other legal gurus, pointed out that Memphis attorneys did not see layoffs to the degree other larger markets did.

“There was a lot of turnover in the corporate in-house area over the past year, but I don’t know if there was a net job loss or not,” Branham said. “(International Paper) had an early retirement come up, and so they had six or seven lawyers leave their legal department. I think only one of them was a … reduction in forced layoff. The others took packages, and they were in their late 50s, early 60s.”

As far as other major employers in Memphis go, their legal departments took hits, but not necessarily always in the form of layoffs. Branham said FedEx Corp.’s in-house attorneys all took a voluntary pay cut; the company also froze their 401(k) benefits, but no attorneys left the company.

No layoffs took place in AutoZone Inc.’s legal department, Branham said, because the company has “had one of the best years they’ve ever had.” As people struggle to make ends meet, they fix their old cars instead of buying new ones.

Health care, always a booming industry in Memphis, has stayed fairly steady since the economic dropoff began in 2008, so the major local players there, such as Smith & Nephew, Medtronic Inc. and Wright Medical Technology Inc., didn’t have to shed workers.

Bass Berry laid off 32 people firmwide in June, 10 of which were associates and the remaining 22 were staff members. Two associates and four staff members from the Memphis office were let go.

Keith Simmons, managing partner in the Nashville office of Bass Berry, talked openly with The Memphis News about the layoffs and the future of the firm, which already is showing signs of improvement.

“We just felt like, there are no secrets, and it was better to put it out there and let it be known and just move on, and that’s what we’ve done,” Simmons said with regard to announcing the layoffs, something most other firms did not do, assuming layoffs occurred.

Simmons said 10 associates joined Bass Berry on Jan. 1 from a deferred start date of Sept. 1, 2009. About the same number of associates will be joining the firm on Jan. 1, 2011, in another deferred start.

“So I think things have stabilized,” Simmons said. “I don’t think we’re going to have a real spike up in economic activity really anywhere in our economy, and I think law practice is going to reflect that.”

The associates hired by Bass Berry for deferred positions received stipends while waiting to start full-time. The stipends were a lot less than what the associates ultimately will bring home, but during the deferral period, the firm also allowed each associate to take out a loan equal to the stipend amount so they could meet their living costs.

Also, Simmons said the firm tries to help deferred associates find ways to keep busy until the job starts.

“For that (first) group, this whole thing swept across the industry in early 2009,” Simmons said. “So, for these people, they had to change their plans midstream, and we tried to do all we could to help them find meaningful opportunities during the deferred period.”

Two of Bass Berry’s associates who started Jan. 1 found that opportunity at the state Attorney General’s Office. Another associate worked for a nonprofit group called Volunteer Lawyers and Professionals for the Arts in Nashville, and another worked for MALS.

More firms have brought associates on in deferred positions, a phenomenon Branham called “really interesting.”

“We had a couple of people, young attorneys, bright attorneys, who had been offered jobs with larger firms here who were being deferred,” Branham said.

Those people worked through Counsel on Call for a few months; Branham said one actually did some project work for the firm they’d been hired to work for.

“They did a great job for us,” he said.

Providing deferred associates with the chance to do pro bono work is a boon for both parties. Linda Seely said several people have come to MALS for just that reason.

“Mostly (they are people) unable to find jobs, and they come to us because they do want to network; they want to get involved; they want to do some things, get some experience. So that’s really fairly common,” Seely said.

Bouncing back

Other local law firms are rumored to have made layoffs, but they were not publicly announced. These “stealth layoffs,” as Simmons called them, became more common as the recession got worse and more layoffs took place.

He said he suspected there were more layoffs than people heard about, as image-conscious law firms sought to keep any signs of trouble to a minimum.

“Memphis is populated with primarily smaller firms, and those law firms were generally not as affected by the economic situation as the bigger firms. … That’s where the real layoffs took place, and I think Memphis was probably not affected as much because you just don’t have any, really, of those huge firms here.

"So I suspect that there were people let go that you don’t know about, but probably not on the same scale as you’re seeing nationally,” Simmons said.

As for Bass Berry, its outlook is slowly but steadily improving for 2010. In a unique move, the firm did not increase its rates last year, something it normally does every October.

Instead, it chopped many of the same in-house costs other firms did to squeeze the most out of every penny possible.

“At the end of the day, the major cost for any law firm is its people,” Simmons said. “So you’re not going to re-engineer your costs substantially without re-engineering the number of people that you have, and the efficiency with which you work and what you pay people. And yeah, we’ve done all that. We’ve restricted travel; we’ve tried to cut down on any kind of discretionary expenditures, just to be prudent.

“And we’re going to continue that through 2010. It’s not like, ‘Whew, that year is over, now we can start spending money again.’ I just think it’s a new day, and we’re going to have to be very cautious.

"But I think 2010 will be a better year than 2009. It’s going to be a slow, gradual recovery … and I think the law industry in general is going to mirror the economy.”

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