Case

Layoffs at Florida’s Holland & Knight

In 1 on January 16, 2009 at 1:44 pm
Holland & Knight, Florida's largest homegrown law firm, is laying off about 60 of its 1,275 lawyers and about 170 other staffers in a move to shore up its finances.

Managing partner Robert R. Feagin III said that the layoffs, which were finalized Tuesday, affected partners, associates and staffers at all levels and in virtually every department. They will not require closing any of the firm's 32 offices across the country and abroad, he said, and most of the jobs cut are outside of Florida.

The firm's vaunted pro bono work will not be significantly affected by the job cuts, he said, nor were the firm's growth plans set aside. "It has not changed in any way our strategy or vision of being a national firm and, indeed, an international firm," he said.

Holland & Knight has been struggling for several months to shore up its finances in the face of growing internal dissent.

The firm, which expanded exponentially during the past 10 years, has been feeling growing pains, as the Daily Business Review reported in March.

Holland & Knight recently froze associate pay while undertaking a review of its entire compensation program. Insiders at the firm speculated that Holland & Knight would need to lay off about 200 lawyers and institute dramatic management changes to avoid desertion by many productive partners seeking higher pay elsewhere.

Holland & Knight's compensation per equity partner has been among the lowest in its peer group for several years.

In a January memo obtained by the Review, one partner warned Feagin that unless the firm took dramatic action quickly, it would see an exodus of partners. According to the Am Law 100 rankings for fiscal year 2000, Holland's profits per equity partner were $395,000 per year, compared with Greenberg Traurig's profits of $635,000 per partner.

One former partner, who asked not to be identified, noted Tuesday that laying off partners would create a substantial short-term expense.

That's because many partners have built up "Section C" retirement accounts of as much as $300,000, amounts that must be paid out immediately if the partner is let go. Departing partners also would have to be paid their share of equity in the firm, he said.

Feagin said that such matters were taken into account in the firm's decision process, but he declined to say how much such short-term costs would be. The firm will not engage in short-term borrowing to cover those costs, he said. He declined to say how much he expected the layoffs to save the company.

The cutbacks were made, he said, as a result of a self-evaluation process that all firms go through.

"You take a look and see what changes you need to make in order to be more effectively and efficiently organized to serve the market," Feagin said. "That's what we did following a decade of rapid growth that pushed us up near the top of law firms in the United States. After that time period, it was certainly appropriate, in the face of a declining economy and the events of Sept. 11, to take a look at how we could better organize ourselves, how we could better allocate resources."

The cuts represent less than 5 percent of the firm's lawyers, he said. The firm had not been trying to cut its size through attrition or layoff in months leading up to this week's dramatic action, he said.

Feagin, 63, who succeeded long-term managing partner Bill McBride last June, said the fact that he does not plan to run for re-election next year made it easier to orchestrate the staff cut without having to worry about internal political decisions.

McBride, who oversaw the firm's expansive growth, from about 275 lawyers to 1,275 in the space of a decade, stepped down to run for the Democratic nomination for governor.

Feagin said that he does not expect the cutbacks to hurt efforts by the firm to make lateral hires or to continue acquiring other firms. Any potential partners likely would look favorably on the firm's making what it believes to be prudent changes, the managing partner said.

But the former partner who asked not to be identified predicted that the firm might well evolve into a smaller, regional firm. "It's not a happy place," he said.

 

Posted via email from HKLaw Investigation

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