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- With courts closed and mergers on hold, major law firms are finding that one of their busiest practices is an area they have winnowed down over the years.
- Labor and employment attorneys are in high demand as employers conduct layoffs and consider workplace safety issues as the coronavirus shutters offices.
- “Firms that invested in labor and employment, at the big-firm level, there is a payoff now,” said Dan Hatch, a legal recruiter based in Los Angeles.
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With many mergers and acquisitions on pause and courtrooms across the country closed, large law firms are finding that one of the busiest practices fueling their business is one they’d increasingly winnowed down over the past decade.
The practice, called labor and employment, advises employers on workplace compliance, legal issues stemming from layoffs and pay cuts, as well as the drafting of employment contracts and benefits, all areas of work that come with lower billing rates many big firms can’t stomach.
Now, though, with employers conducting layoffs left and right, with more than 10 million people in the US filing for unemployment benefits in the last two weeks of March, attorneys who specialize in this work are in hot demand, and big firms are re-positioning to beef up COVID-19 task forces to advise employers.
“It has, I would say, been 24/7 the past few weeks,” said Michael Sheehan, a partner with the law firm of McDermott Will & Emery, who has advised employers on workplace policy as well as guidance on new laws formed in response to the coronavirus, such as the CARES Act and Families First Coronavirus Response Act.
“It really dates back to Thursday, Feb. 27, when I must have spent 10 hours straight on calls that were unscheduled, dealing with COVID workplace issues. The legislation hadn’t been passed yet. But from that point on, it became a thing,” he said.
Sheehan and six other attorneys Business Insider interviewed said there has been a progressive wave of employment work at the nation’s top law firms, with corporations seeking guidance on a panoply of issues, from managing employees who may have been infected by the coronavirus, to instituting furloughs and layoffs.
In mid-March, when the CARES Act hit, the advice shifted to ensuring clients could qualify for bailout relief.
“You have, on the one hand, a historic number of unemployment claims. And on the other hand a historic amount of loan applications. We are dealing with all of that,” said Sheehan.
High-stakes work postponed
The uptick in labor and employment work comes as the high-stakes trials and mergers big law firms typically make a fortune on are being postponed.
Jed Rakoff, the federal court judge in the Southern District of New York, known best for his high-profile Wall Street rulings, told Business Insider his own trials slated for April and May have been pushed to July and after, with much of his time spent on emergency matters, like granting releases for prisoners at risk from the coronavirus.
One M&A attorney said he had been working on a slate of 10 mergers and acquisitions pre-coronavirus, which were all put on ice, and now he’s working on restructuring matters for the same clients — a scenario that has attorneys questioning what the future looks like for Big Law’s most prolific rainmakers.
Much of the legal work required by the coronavirus crisis is falling on the labor and employment attorneys to help companies navigate basic survival, guiding them on how to apply for loans to get bailout money, while mitigating the risk of future lawsuits by advising them on how to manage and sometimes reduce their workforce.
“Firms that invested in labor and employment, at the big-firm level, there is a payoff now,” said Dan Hatch, a legal recruiter based in Los Angeles.
“And it’s probably unexpected,” he noted. “Nobody could have planned for this.”
Over the past decade or so, major law firms have prioritized expanding in high-margin practices, such as private equity and hedge fund work, public company mergers and acquisitions, and high-stakes trials and investigations.
There has not been so much focus on building labor and employment practices, which entails both labor work such as dealing with union negotiations and labor contract disputes, and employment work, meaning anything related to hiring and firing and workplace conditions.
Billing rates for partners at big law firms are typically $900 and up, with some exceptions, while labor and employment attorneys go lower than this, between $500 and $600 an hour, according to consultants.
“What the market will pay for that advice is just lower than what clients want to pay for other types of work and that has led to the various types of segmentation, but, most notably, you have entire national law firms built around just labor and employment,” said Keith Wetmore, a recruiter at Major Lindsey & Africa who previously chaired the law firm Morrison & Foerster.
Those firms include Littler Mendelson, with 80 offices worldwide and more than 1,500 attorneys, Jackson Lewis, a New York City-founded firm with more than 950 attorneys in the U.S. and Puerto Rico, and Ogletree Deakins, with more than 900 attorneys across 53 offices including the U.S., Europe, Canada and Mexico.
Some big law firms, though, still maintain active labor and employment practices, such as Morgan Lewis, Paul Hastings, and Proskauer, though they have tended to focus on higher-billing matters, like labor disputes between professional sports leagues and athletes.
Even firms without large L&E practices, though, are scrambling to establish COVID-19 response teams offering counseling services and pro bono work.
“I’ve never received legal developments this quickly in such a short period of time and I’ve been doing this 27 years now,” said Michael Roche, the chair of Winston & Strawn’s labor and employment group. “It is an unprecedented environment in which new laws, orders, and agency guidelines are being issued.”
Winston has set up a swat team of attorneys across tax, benefits, and transactional practices, who are reviewing hundreds of pages of new laws and state orders.
“I think the attorneys’ main role is advising on the risks and benefits,” said Roche.
“It’s the business’s role to decide whether to cut expenses and to what extent there is just not enough work for people. My role, at a high level, is to explain what rules apply to those various ways to cut expenses and the risks and benefits.”
Laura Maechtlen, the chair of labor and employment at Seyfarth Shaw, said her firm is helping retail and healthcare companies hire on a rapid-fire basis, meeting the demands for essential services like online ordering, as well as staffing medical workers.
In some cases, she said, the firm must look at whether these companies can forego traditional job applications to get people in the door.
Other issues include whether to require employees to wear masks, and how to enforce social distancing guidelines at companies requiring on-site workers.
“It’s been what I would call an onslaught in a number of areas,” said Maechtlen, who noted that her own practice has shifted from counseling clients on workplace issues from 30 to 40% of the time to 100% of the time.
Some corporate clients are asking for “slow pay” arrangements, she said, meaning that they can time-stagger payment of their legal invoices. “I am hoping we don’t see a lot more of that,” she said.
Another attorney said she is already helping companies prepare for the post-pandemic workplace.
Natalie Pierce, a shareholder with Littler in San Francisco, said she is seeing companies offer furloughed employees online learning courses. She has also been discussing the possibility of prolonged remote work arrangements with employers.
“It’s been a real evolution of first protecting employees, then asking how do we go remote and what does it mean when we have to reduce our workforces,” she said. “Now it will turn to, how do we bring folks back and what does that look like.”
Labor and Employment