Law Firms Cutting Expenses and Staff
August 5, 2008
There is an interesting article in Bloomberg about how the credit crunch and litigation slow down has affected law firms and their partners. Some of the side effects cited in the article include some law firms requiring partners to take out bank loans for any amount above the minimum amounts provided for in their partnership agreements.
According to Bloomberg research, deal flow is down 34% this year, resulting in an estimated 15% drop in the income partners at the top 100 firms can expect. Such dramatic slow down has caused many firms to delay hirings, fire associates, and in some cases terminate partners.
Most of the slow down has been felt in finance, private equity, and real estate practices. Some of the law firms cited shed nearly 10% of their staff. This is an area to keep an eye on since some of the strongest Silicon Valley markets (Menlo Park, Palo Alto) greatly benefit from the presence of law firms. That said though, several firms have recently bucked the trend by taking on additional space in the past two quarters.
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