Big Firm Offices in New York Ballooned Before 2020 Cost-Cutting Started

Before the coronavirus pandemic triggered high unemployment, many law firms were rapidly increasing their New York ranks, adding legions of lawyers in the state.

This year’s New York Law Journal 100 captures a great expansion in big firm offices, right before scores of firms took austerity measures. The 2019 expansion likely reflects the highly prosperous years enjoyed by the legal industry leading up to the coronavirus crisis. The growth may also help explain why some firms could not afford to delay cutting pay or laying off employees at the start of the 2020 recession.

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The NYLJ 100 tallied the average number of full-time equivalent lawyers at law firms across the state and ranked the firms on their New York presence.

Overall, about 19 law firms on this list saw more than 10% growth in New York attorney head count in 2019—the highest seen in recent years and more than double the number for 2018.

The growth was seen up and down the NYLJ 100 rankings, including at some of the same firms experiencing pay cuts or layoffs in 2020.

For instance, two firms that laid off some staff this year, Goodwin Procter and McDermott Will & Emery, saw a 17.3% rise to 244 lawyers in New York and 10% rise to 142, respectively, in 2019.

Meanwhile, Holland & Knight, Dentons, Orrick, Herrington & Sutcliffe and Akerman all saw New York office head count grow more than 10% in 2019, before they instituted pay cuts for attorneys and staff.

In statements, almost all these firms said the growth they experienced in 2019 had no bearing on more recent cost-cutting moves, which they described as proactive measures to preserve flexibility. (McDermott did not respond to a request for comment.)

At Holland & Knight, which saw some staff furloughs and pay cuts this year, the firm’s New York office grew 13% to 132 lawyers in 2019 after several partner hires, many in corporate and transactional groups.

In a mid-June interview, managing partner Steven Sonberg and operations and finance partner Douglas Wright said the contributions of the people who arrived in 2019 are helping the firm’s financial performance this year. “Our growth in 2019 has continued to benefit the firm,” Sonberg said, adding “we’ve got really strong performers in New York who are continuing to have good results.”

Even if the firm had no head count gains in 2019, it would have implemented cost-cutting measures, Wright said, adding the firm anticipates about a 10% decline in demand in the second quarter, in line with some legal industry surveys.

Looking forward, Holland & Knight expects to have flat head count in 2020. While hiring has slowed, the firm is still making strategic hires, the firm’s leaders say.

Akerman’s chairman and CEO, Scott Meyers, said the firm’s “proactive decision” to make cost control measures “was in no way related to our growth strategy in New York, which continues to be a thriving and successful office.” He said the firm has had “deliberate” growth by “strategically recruiting exceptional lawyers who bring the right chemistry and client experience to the firm.”

For its part, Dentons said its growth last year and its 2020 “resiliency measures … are completely unrelated.” The firm said it undertook “proactive steps” to ensure the firm’s success continues amid uncertain times. ”Yet we continue to grow through attracting and hiring top legal talent across the U.S., including in metro New York this year,” the firm said.

Declining Head Count

Of course, firms that had a contraction in attorney ranks last year had also made expense cuts. For instance, Kelley Drye & Warren, Baker & Hostetler and Barclay Damon—which all confirmed attorney pay cuts this year—reduced their New York office head counts last year by roughly 5% each, according to ALM data.

Almost no firms in the NYLJ 100 saw head count reductions of more than 10% in New York. One exception, Shearman & Sterling, disputed ALM’s data, noting the firm’s own full-time equivalent figures showed only a slight decrease in 2019.

Overall, the net gains in attorney head count across the NYLJ 100 more than made up for losses. The top 100 law firms employed about 23,690 lawyers in New York last year, according to ALM’s data, an increase of about 3% from these firms’ 2018 head count figures.

Most of the firms with large New York gains were actually headquartered outside the state. For instance, among the top 20 of the NYLJ 100—mostly a group of elite New York-founded firms—the average gain was only about 3.3%.

The firms with some of the highest head count growth in New York last year included Washington, D.C.-based Covington & Burling, rising 19% to 176 lawyers; Boston-founded Goodwin; and Washington, D.C.-based Venable, rising 60% to 152 lawyers after its merger with Fitzpatrick, Cella, Harper & Scinto.

Even with almost no change in the number of New York attorneys, Paul Weiss Rifkind Wharton & Garrison remains No. 1 in the NYLJ 100, with 832 attorneys in the state.

Kirkland & Ellis continues to climb the chart. The firm, with scores of lawyers dedicated to private equity, restructuring and litigation, is now ranked No. 4 with 646 lawyers in the state—a 77% growth in New York attorney head count in five years.

Looking at the legal industry as a whole in 2019, total lawyer head count was up 1.9%, marking one of the highest growth spurts since the last recession, said Gretta Rusanow, head of advisory services within Citi Private Bank’s Law Firm Group. Leverage rose 2.5% last year, she said, suggesting associate ranks, in particular, are expanding.

The head count growth in 2019, Rusanow said, suggests firms expanded based on the success of 2018. In that year, the industry had its strongest net income and profits per equity partner growth since 2007, Citi has reported.

Largest Government Offices

The New York City Law Department inched up by about 1% to 987 lawyers last year—extending its reign as the largest law office in the state, even above Paul Weiss. Similarly, the New York Attorney General’s Office grew by about 1% to 711 lawyers, which put it within the top three law offices in the state by size.

Three of the four federal prosecutors’ offices in New York have also grown. The Southern District U.S. Attorney’s Office expanded to 247 lawyers in June 2020, up 6% from 233 at the end of 2018. The Northern District, with 48 lawyers, saw a net gain of five, while the Western District, with 60 lawyers, gained an additional three. Meanwhile, the Brooklyn U.S. Attorney’s office has stayed flat at about 162 lawyers.

Other prosecutors’ offices in New York City saw little growth. The Manhattan District Attorney’s office shrank by 2% last year to 614 prosecutors, and the Queens DA’s office contracted 2.75% to 318. The Brooklyn DA’s office inched up by three lawyers to 548, while the Staten Island office stayed at 73. The exception in New York City was the Bronx DA’s office, which grew 7% to 531 prosecutors in 2019.