Law Firms Stung By Downturn in High-Tech
BY DENISE T. WARD
Staff Writer
The recent layoffs at San Diego’s largest private law firm wasn’t seen by legal experts as a sign that things are going south for the local legal industry.
Rather, it’s an indication that the downturn in the technology industry statewide continues to affect law firms specializing in that field.
“The law firms which, over the last two years or so, have favored the Internet and high-tech industry are probably the ones feeling the biggest effect right now,” said Monty McIntyre, president of the San Diego County Bar Association. “We’re seeing a ripple effect with the law firms that have actively sought to develop the high-tech legal work.”
There were indications last March that the legal field was feeling the heat of the dot-com and start-up business fallout, according to experts. What has happened, according to McIntyre, is some firms that tried to make it through the tough economic period couldn’t do so any longer without making some changes.
On Jan. 3, Gray Cary Ware & Freidenrich, the city’s largest law firm whose clients include DuPont, the San Diego Employers Association and Hewlett-Packard Co., laid off 46 attorneys, 19 paralegals and 49 support staff. The firm, which concentrates the majority of its practice on technology companies, cited a slowing economy and the technology downturn for the cuts.
The firm’s chairman and chief executive, Terry O’Malley, said they tried to hold out as long as they could, but didn’t foresee a change in the near future.
Gray Cary isn’t the only firm to undergo major changes due to the slowing economy. Most recently, in November, San Francisco-based Brobeck, Phleger & Harrison cut 84 jobs through a separation incentive program. Eight attorneys in the San Diego office participated in the program, which offered a buyout of their contracts.
Louis Helmuth, assistant dean for Career Services at California Western School of Law, said the downturn is nothing new. He said it resembles the same slowdown law firms faced in the early 1990s. The difference, he said, is now the focus is on larger law firms, and layoffs should not be seen throughout the field.
“Government agencies, corporate and even smaller law firms; I don’t believe they are experiencing as painful a hit with the economic downturn as others,” Helmuth said. “We’re seeing the economic downturn affect lots of industries where the large law firms get a lot of their work.”
Helmuth said Cal Western graduates have been highly recruited by local firms in the past, including Gray Cary, but recruitment has declined since the economic downturn. Some firms, he said, have eliminated their summer associate programs, a highly successful tool used for hiring first-year associates.
“I think we’ll see firms being hyper-cautious about their prospective hiring, for one thing, to weather the economic storm and see how it turns out,” he said.
In 29 years of practicing law in San Diego, Mike Cowett, a member of the executive committee for Best Best and Krieger, has seen the ups and downs of the field. He also said the latest downturn is not industry-wide “by any means.”
“It’s not going to affect the entire legal industry, it’s going to affect that portion of the legal industry that has been servicing clientele affected by the recession,” he said.
