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Stroock & Stroock & Lavan, a New York-based law firm, recently announced layoffs for nine lawyers and 18 staff members. The firm cited a “slowdown” in the legal industry as the reason for the move. The layoffs came after a “comprehensive review” of its practice groups and the demand for their services in the near future. The firm said, “In light of the current slowdown, we determined that we had more attorney and staff resources than we needed for the foreseeable future. Therefore, we decided to separate from nine non-partner attorneys and 18 staff/business professionals, with severance and other support being provided to help ease the transition. We wish our colleagues the best in their future endeavors.”
This move by Stroock & Stroock & Lavan is not an isolated case, as several other law firms have also announced layoffs in recent months. Firms such as Goodwin Procter, Kirkland & Ellis, Cooley, and Gunderson Dettmer have all announced layoffs, with many of these firms heavily weighted towards tech clients, who have themselves cut budgets and laid off employees.
The layoffs at these firms have been attributed to an attempt to “right-size” their lawyer headcounts following a boom in hiring during the record-setting year of 2021, which was driven by mergers and acquisitions and capital markets practices. However, with the slowdown in the legal industry, many firms have found that they now have more lawyers and staff than they need.
According to AmLaw data, Stroock & Stroock & Lavan was the 128th largest law firm by revenue in the US in 2021, bringing in $274 million. The firm is known for its profitability, with its partners earning an average of $2.3 million. However, the firm has seen several of its lawyers depart in recent years, including nearly 20 partners who left for Paul Hastings last year. These lawyers subsequently won a coveted position as lead lawyers for the creditor’s committee in the cryptocurrency exchange FTX’s Chapter 11 bankruptcy.
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In response to these departures, Stroock & Stroock & Lavan hired six restructuring attorneys from Luskin, Stern & Eisler in New York. Despite these hires, the firm still find it necessary to lay off lawyers and staff in the face of the current slowdown in the legal industry. This highlights the challenges that firms face in the current economic climate, as many are struggling to maintain profitability and are forced to make difficult decisions such as layoffs.
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This slowdown in the legal industry is not limited to Stroock & Stroock & Lavan, as other firms have also been affected. However, it is essential to note that this is not a new phenomenon, as the legal industry has always been cyclical in nature, with periods of growth and downturns.
The current slowdown is likely due to a combination of factors, including a decrease in demand for legal services, increased competition, and the impact of the ongoing COVID-19 pandemic. The pandemic has caused many businesses to cut back on spending, leading to an overall economic slowdown. This has resulted in a decrease in demand for legal services, which has led to a decrease in revenue for many law firms.
Additionally, increased competition in the legal industry has also been a factor in the slowdown. With more firms entering the market, more competition for clients and talent exists. This has made it more difficult for firms to maintain profitability and has decreased revenue for many firms.
In conclusion, the layoffs at Stroock & Stroock & Lavan are not an isolated case, as other firms have also been affected by the slowdown in the legal industry.
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REFERENCES:
Stroock Lays Off Associates, Staff Amid Big Law Belt-Tightening
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