Law firms, once thought to be better able than most to weather sour economies, are finding themselves in a tough spot these days, the Wall Street Journal reports. While bankruptcy practices are holding steady, business in litigation has fallen off steeply as corporate clients settle instead of writing checks to firms. Across the industry, profits were down 8% to 12% last year, and firms are letting lawyers go left and right.
Midsized concerns are the hardest hit: When business slows, top talent can jump ship to larger, more stable competitors, often dooming their former firms. “Law firms are not the kind of companies that do well in adversity,” one lawyer said. “When bad things happen, people get nervous and they start to look around.” The loss of star lawyers can sink merger deals, compounding problems and quickly dissolving even venerable, long-lived firms.