stars of suck without you
marika
More vulnerable as work slows.
Lynne Marek / Staff reporter
March 23, 2009
Law firms aren't the only ones pushing attorneys out the door to shrink
costs. U.S. companies, both large and small and across varied industries,
are dismissing attorneys as they retool their law departments to cut costs
and adapt to slowing U.S. economic activity.
Hyatt Corp., Cigna Corp., General Electric Co., eLoyalty Corp., Motorola
Inc., Merrill Lynch & Co. and Yahoo! Inc. are among those that have reduced
the number of attorneys in their law departments during the past year as
their companies seek budget cuts amid the U.S. recession.
Some of the lawyers were shed as part of broad employee dismissals.
Already this year, the Association of Corporate Counsel's membership has
dropped, for the first time since 2003, declining by almost 6% to 23,396
this month after average 10% annual increases.
The number of recently dismissed attorneys whom the association is allowing
to remain temporarily as members without paying dues has jumped by 50% to
321 during the past year. The association is hopeful that membership will
increase by 1.5% from its 2008 level by the end of September.
Although companies often cut back on outside counsel expenses before shaving
internally, the law departments are being forced to chop the head count now
as budget-cutters zero in on employees squarely in the cost column.
"Anybody who's not generating revenue is particularly vulnerable," said
Steve Shapiro, the general counsel at Rosemont, Ill.-based Cole Taylor Bank,
who just started there this month after being cut from the same post at
eLoyalty Corp., a Lake Forest, Ill.-based consulting company now without a
general counsel.
Cuts involve all industries
The pain for in-house attorneys has generally been spread across industries,
with lawyers at those companies most affected by the recession faring worst,
said Deborah House, who is deputy general counsel of the Association of
Corporate Counsel.
"Name an industry where you've seen a significant problem, and attorneys are
experiencing it along with everybody else," said House, pointing to auto
manufacturing, insurance and financial services.
In-house attorneys may be inexpensive alternatives to outside counsel in
some cases, and even integral to identifying cost-cuts in other parts of the
company, House noted.
Still, there's a point at which the legal workflow slows so significantly
that the cost equation tilts in the other direction, against in-house
lawyers. Their high salaries and healthy benefit packages are suddenly seen
as expensive overhead, in-house lawyers said.
Fairfield, Conn.-based General Electric has cut lawyers across the country
while Motorola, which is based in the Chicago suburb of Schaumburg, Ill.,
has shed attorneys in the Midwest, according to legal recruiters.
GE and Motorola declined to comment on the reductions. Yahoo's attorney
dismissals in California came in December, when the company made broader
reductions, said Kim Rubey, a spokeswoman for the company.
There are clearly more in-house attorneys on the street looking for work
than there were two years ago as a result of bankruptcies, mergers and
companies shrinking their departments, said P.J. Harari, a legal recruiter
in the Los Angeles office of Major, Lindsey & Africa who heads searches for
such lawyers.
"I am seeing more efficiency being asked of the leaders of the departments,"
she said.
A regional slant
The industries from which significant numbers of attorneys have been shed
vary from region to region.