NEW YORK, June 20 (Reuters) - A pair of court decisions
involving secretaries fired during mass layoffs at Fried, Frank,
Harris, Shriver & Jacobson in 2008 are shedding light on the
impact of the financial crisis on the Wall Street law firm.
The decisions, the most recent of which was issued on
Tuesday, state that Fried Frank's gross revenues fell 20 percent
that year, much more than previously reported. The decisions
also made public that 43 staff members were laid off, a number
that was previously unconfirmed. Also, one of the decisions
quotes Fried Frank's chair as saying the economic downturn
"decimated" its business.
While evidence and motions in the cases are sealed, the
court decisions summarize these and other key details. In both
cases, judges ruled that the two secretaries, Judith Cuttler and
Roseanne Zito, could not support their claims that Fried Frank
discriminated against them.
The year 2008, when Lehman Brothers Holdings Inc failed,
marked the beginning of difficulties to come for large law
firms. While gross revenue at the top 100 firms, which include
Fried Frank, grew by 4.1 percent, profits per partner declined
4.3 percent and revenue per lawyer fell 1.2 percent, according
to The American Lawyer.
Even before the two court decisions, it was clear Fried
Frank was affected by the financial crisis. As part of its
annual survey of law firm finances, The American Lawyer reported
that Fried Frank's gross revenue fell 9 percent to $488 million
and profits per partner fell 23 percent to $1.23 million. Fried
Frank likewise confirmed laying off staff members in August
2008, the period at the center of the two lawsuits.
Patricia Lojo, a spokeswoman for Fried Frank, declined to
comment, as "a matter of policy," on the discrepancy between the
9 percent reported decline in gross revenue reported at the time
and the 20 percent decline in U.S. District Ju d ge Robert Sweet's
decision on Tuesday in Zito's case.
In that decision, Sweet quotes Valerie Ford Jacob, the
chairwoman of Fried Frank, saying the firm's business began to
"deteriorate" in 2008 as attorney hours dropped.
Kathy Alcott, the firm's director of secretarial services,
testified to planning for the secretary layoffs after being told
at a May or June 2008 meeting with Jacob and Managing Partner
Justin Spendlove that the downturn was affecting the firm.
Both Sweet and U.S. District Judge Deborah Batts, who ruled
in Cuttler's case in March, said 19 secretaries were laid off at
that time, including "floater secretaries," such as Cuttler, who
weren't assigned to specific attorneys. Fried Frank laid off all
of its floater secretaries, according to Batts.
Batts cited the firm's layoff of all of the floaters without
regard to performance as a factor in dismissing Cuttler's
lawsuit, which accused the firm of firing her because of her
age, gender and disability.
Cuttler, who had counsel at the district court level but is
now applying for pro bono counsel, has appealed her case to the
2nd Circuit Court of Appeals. She declined to comment on
Wednesday beyond the court documents.
In the case of Zito, an evening secretarial supervisor in
Fried Frank's New York office, Sweet likewise said there was no
proof that she was discriminated because of her age, gender and
Sweet noted that Alcott had testified that she decided to
eliminate the position Zito held because the work had
"drastically decreased" since she was hired in 1998 and had been
absorbed by Zito's supervisor.
"Over the years, as attorney work habits changed and
attorneys became more computer literate, the number of evening
secretarial desk assignments requested by attorneys dwindled to
only two or three assignments per night," Sweet said.
Zito's lawyers, Daniel Alterman and Patrick DeLince, said in
a statement they were "disappointed with the ruling" and "will
do everything possible to protect and vindicate Ms Zito's legal
and civil rights."
Fried Frank had more job cuts after the August 2008 round,
confirming in March 2009 that it would cut 41 associates and 58
staff members. Its revenues continued to decline until 2010,
when they surged upwards, according to The American Lawyer.
Last year was softer, according to The American Lawyer.
Fried Frank grossed $474 million, up 0.5 percent, while profits
per partner fell 0.6 percent to $1.58 million.
Gross revenue throughout The Am Law 100 rose 5.3 percent in
2011, while profits per partner on average rose 3 percent, The
American Lawyer reported.
The case is Zito v. Fried, Frank, Harris, Shriver &
Jacobson, in the U.S. District Court for the Southern District
of New York, No. 09-9662.
For Zito: Daniel Alterman and Patrick DeLince.
For Fried Frank: Bettina Plevan and Marc Mandelman of
(Reporting by Nate Raymond)
Follow us on Twitter @ReutersLegal | Like us on Facebook