The coronavirus pandemic is prompting law firms across the country to make drastic changes to avoid financial disaster.
Attorneys are facing pay cuts or are being laid off as firms struggle to keep up with the outbreak’s toll on the legal industry. Some are seeing a lucrative opportunity in client demand for legal help facing unprecedented challenges posed by the spread of COVID-19. As some businesses struggle to stay open amid the economic fallout, law firms are gearing up to hire bankruptcy lawyers to prepare for the expected wave of corporate Chapter 11 bankruptcy filings.
The ABA Journal, the flagship publication of the American Bar Association, reported legal services have risen for coronavirus-specific needs. Some firms have even created task forces to help assist clients in handling the challenges brought on by the pandemic. For instance, national law firm BakerHostetler and international firm Alston & Bird have created task forces featuring lawyers from multiple practice areas mainly focused on the changing labor market and practices.
Other law firms seek bankruptcy lawyers, who have an area of expertise that hasn’t been in strong demand since the aftermath of the 2008 financial crisis. According to the Wall Street Journal, the pool of available talent specializing in bankruptcy is shallow because the practice has been stalled in recent years due to a decline in filings.
The looming generation gap in talent also presents difficulty for firms seeking this specialty. The report cites data from Firm Prospects LLC that shows 1 in 3 bankruptcy lawyers graduated in or before 1990.
The nonpartisan National Bankruptcy Conference, which is composed of attorneys, law professors, and bankruptcy judges who advise the government on bankruptcy policy, recently sent a letter to congressional leaders asking them to take action amid the pandemic. It requests that the country’s bankruptcy system provide relief during the spread of COVID-19 to avoid mass layoffs and financial devastation.
The letter also said Congress should propose legislation that would give tax credits to small and medium businesses as well as raise the debt threshold for small businesses that may need bankruptcy relief.
A comprehensive list compiled by American Lawyer follows how prominent firms in the United States are being pushed into laying off employees and issuing pay cuts to protect themselves financially.
At the Washington-based firm Arent Fox, a temporary 25% pay cut for associates and staff, as well as a 60% reduction in equity partner distributions, went into place.
Baker McKenzie announced a 15% salary reduction for all nonpartner attorneys, timekeepers, and business professionals in the U.S. making at least $100,000.
Nixon Peabody LLP furloughed about 25% of its staff in April and cut 10% of nonpartner attorneys. Of those let go from the firm, half would be layoffs receiving three months of health insurance, and the other half were furloughs with expected full benefits.
