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Several large firms across the U.S. have publicly committed to avoiding layoffs despite the economic pressures imposed by the new coronavirus. It appears that a number of Pennsylvania-based firms also want to stay in that club, even if it requires other sacrifices.

Leaders of multiple Am Law 200 firms based in Pennsylvania came out early to say they enacted their cost-cutting measures of choice as part of a deliberate effort to avoid laying off employees.

Most recent was Fox Rothschild, which specifically said in a statement Monday that it is not currently planning any layoffs or furloughs of staff or attorneys. The firm has rapidly expanded in various locations throughout the U.S. in recent years, and its lawyer head count has grown to 860, according to the 2020 Am Law 100.

"We have taken these measures in the spirit of retaining our attorneys and staff and remaining nimble as the impact of the pandemic unfolds, while at the same time sharing the potential burdens of the crisis across all constituencies of the firm," Fox Rothschild's statement said.

Others made statements to a similar effect earlier this month in explaining their choices to defer partner compensation, cut salaries and, in some instances, implement limited furloughs.

"We made the hard decision to enact painful but necessary cost-cutting measures now in the hopes that it will put the firm on better footing when things improve," Ballard Spahr chairman Mark Stewart said. "We hope to avoid layoffs and to remain as busy as we have been, guiding our clients through this turmoil and back to normalcy as soon as possible."

Cozen O'Connor CEO Michael Heller, in discussing his firm's choices, said his firm is doing everything it can to avoid pay cuts and layoffs, and noted that the people who have been furloughed will be made whole by funds available through the CARES Act.

Pittsburgh-based K&L Gates said its approach to cost-cutting was done "to preserve jobs."

"Our goal is to implement measures that allow our firm to emerge from this crisis strong and vital. This is of great importance to the thousands of families that rely on the firm for their livelihood, and the tens of thousands of clients relying on the firm to counsel them through their most difficult challenges," K&L Gates' statement said.

Others, including Blank Rome, Buchanan Ingersoll & Rooney and Duane Morris, emphasized in their statements that their furloughs are intended to be temporary. Duane Morris also said it will cover the cost of health insurance for furloughed employees during that time, noting a "commitment to making our people as financially whole as possible."

"The legal community seems to be banding together and figuring out different ways to absorb risk," Pittsburgh legal recruiter Maura McAnney said. She also noted that law firms seem to have learned a lesson from the Great Recession, when many laid off young lawyers and staff, and later found themselves ill-equipped to handle all the work available when the economy picked back up.

Those lessons came from long-term effects—as recently as a year ago, recruiters in the Philadelphia area were noticing high demand for midlevel associate talent. Firms' conservative approach to young lawyer hiring in the years following 2008 meant that several years later, when demand was picking up in 2018 and 2019, the amount of already-developed midlevel talent wasn't matching up.

So far, just one law firm has shown up in Pennsylvania's mass layoff and closure notices this year, which are required under the federal WARN Act. That firm is Philadelphia-based Phelan Hallinan Diamond & Jones, which laid off 48 people effective March 27, according to a notice made public this month.

The notice said the layoff is because of COVID-19 and is expected to be temporary. Phelan Hallinan specializes in mortgage foreclosures, which have been halted because of the coronavirus. Managing partner Rosemarie Diamond did not respond to a request for comment on the notice.

The Effects of Different Business Models

In midsize and smaller firms, the impacts of an economic downturn can vary widely depending on the firm's practice mix and business model. While midsize firms around the country have been among those forced to lay off employees or make other cuts, several in Pennsylvania said their usual business practices have so far insulated them from having to do so.

David Pudlin, president of Hangley Aronchick Segal Pudlin & Schiller, said his firm actually came in above budget for March, despite working remotely for the second half of the month, and so far in April has stayed busy. It even recently started the process of hiring another lawyer laterally to help with the work load, after bringing on a new hire just a few weeks ago.

"Nobody can forecast the future with great accuracy, but we are hopeful and confident that this will continue to be a very good year for our firm. As such, we have had no need to lay off, furlough, or reduce the compensation of anybody in the firm, and we hope that continues to be the case," Pudlin said in an email.

Asked about how the firm fared in the last recession, he said things slowed some, but not to a point where Hangley had to do any layoffs, furloughs or pay cuts.

"While we really did not learn anything back then that is applicable today, we are very aware that it always is important to run a tight ship and pay attention to both the large and small details," he said.

Michael Frattone, a managing partner of Philadelphia-based Kleinbard, said his firm doesn't expect to do any layoffs or other expense reduction measures in the near term.

"We have no plans today to take cost-cutting moves because we went into this on very sound financial footing and in a strong cash reserve position," Frattone said in a statement. "Additionally, we anticipate that there will be tremendous pent up demand on both the transactional and litigation side, and are hopeful that Q3 and Q4 will be very busy."

Though he also noted that a resurgence of the coronavirus later in the year could make for a need to reevaluate "based on the economic outlook at that time."

For plaintiffs personal injury law firms, the COVID-19 epidemic has posed some challenges, but seemingly fewer cash flow issues.

Sol Weiss, managing partner of Anapol Weiss in Philadelphia, said court closures have put trials on hold, but cases are still settling, so money is coming in.

And there's plenty to keep the firm's attorneys and staff busy while they're working remotely.

"We're still doing depositions remotely and taking discovery remotely—in some medical malpractice cases the hospitals don't want to cooperate, but eventually they do," Weiss said. "On the mass tort side, we can still get medical records no problem, and we're still able to file claims electronically."

Weiss said the firm has pledged to its staff members that they won't miss a paycheck. The firm has also continued to contribute 35 cents for every dollar employees put toward their 401(k) plans.

"Our emphasis is making sure the staff gets paid, and they all do," Weiss said. "So far, we have not had to cut partners' pay because we basically take our bonuses at the end of the year, so we're OK. And we have really good banking relations."

Weiss added that the firm is also fortunate to have relatively low overhead costs.

"We don't have that big, big infrastructure that a lot of the corporate firms have," he said. "We're much leaner and meaner."

Zack Needles contributed to this report.

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