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American Bar Association

ABA Section of Business Law


Business Law Today

Snap Judgments
By Molly Thomas
Recession Chic
What was old (fashioned) is new again in terms of office attire. The Wall Street Journal reports that the power suit is reappearing as layoffs loom large in the legal world. Gretchen Neels, a Boston communications consultant, says, "In our economic times, you really want to have your game on. You can't be too formal." After more than a decade of business casual, which in some cases disintegrated into simply casual, even the youngest former proponents of "comfortable" office wear are suiting up in the face of uncertainty. No longer can a sense of entitlement dominate dress code attitudes, as Ms. Neels says, "If they want you to dress up like Big Bird every day, for $160,000 a year, just do it!" Firm Bickel & Brewer, with offices in Dallas and New York City, never acquiesced to a business casual way of doing things, and even the mail clerks there wear suits and ties. Formality fits, and at menswear retailer Paul Fredrick, the recent big sellers have been white-collared dress shirts and the yellow power tie, both favored 1980s trademarks.
A Friendly Game of Chutes and Lawyers
Lawyers are no strangers to competition, and so it only seems natural that firms would begin holding contests to see who could drum up the most new business. The National Law Journal reports that Boston-based boutique litigation firm Hanify & King called their networking contest "Passing the Bar," and awarded prizes based on points accumulated for collecting business cards, attending seminars, and, the biggest potential point maker, setting up one-on-one meetings with potential clients. Executive director Bob Perry said, "I wanted the associates to participate in this as something that will help their professional careers. It's difficult to get out of the office and meet people and go to events." First prize in the Hanify & King contest, in which all 12 Boston associates participated, was a weekend getaway to Cape Cod. Winner Chris Morrison, business litigation associate, said, "Mostly it was about good habit creation. In a firm of our size, it's important for attorneys to be active in the community . . . It's a pretty important part of what we do [and] how we develop professionally."
Pay Problems
Wage and hour litigation is seeing an increase in the deteriorating economy and crumbling job market, and no business or industry seems to be exempt. Reports New York Law Journal, wage and hour class action suits have been filed against employers in various large industries, such as insurance, health care, and publishing, as well as small businesses like restaurants and grocery stores. Allegations include failure to compensate for hours worked off the clock, impermissible deductions, and withheld gratuities, among others.

BusinessWeek reports that as jobs disappear across every industry, more employees laid off without severance are turning to class action suits seeking compensation under WARN, the federal Worker Adjustment and Retraining Notification Act. A surprising number of companies are skimping on severance as they trim their bottom line and attempt to stay afloat. Says Gerald T. Hathaway of the New York office ofemployment law firm Littler Mendelson, "Companies used to throw up their hands and say, 'Just pay it.'" But these days they are "looking for more certainty that they really have to [pay out], because it's not cheap." Although there are no national figures kept on WARN activity, employment lawyers report a major spike in complaints.

The Wall Street Journal reports that age complaints in particular are on the rise, as claims of age discrimination are at their highest levels. Researchers point out that it may be more difficult for older workers to find new comparative employment than those newer to the workforce, and that older workers could be more heavily targeted because "the senior staffers are generally the highest paid and have the most lucrative benefits," says David Grinberg, Equal Employment Opportunity Commission spokesperson.
Boost in Revenue for Regional Firms
If anyone can be considered a winner in the current economy, mid-sized regional firms might fit the bill, reports the American Lawyer. Those that are able to offer quality work at a lower price may stand to profit from cost-cutting at large companies, where general counsel are looking for less expensive firms. Enter the mid-sized regional firm, particularly those that have already been contracted for smaller projects in the past. Robert Feit, general counsel at Paoli, Pennsylvania-based electronics manufacturer Ametek, has started contracting more work with mid-Atlantic firm Saul Ewing because, he says, "we do a lot of transactions, and we use the larger New York firms. But that is very expensive. So we decided, 'Let's try someone in our backyard that has all the capabilities we need.'" Feit's strategy seems to typify the trend, which still steers high-end deals to the top firms but deems mid-sized firms, with typically 100-300 lawyers, "more than capable" for bread and butter work. This doesn't mean that the mid-sized firms aren't suffering due to the economy, as layoffs seem to be a reality across the board—Saul Ewing cut 12 administrative employees in January. Will the mid-sized firms retain their coup when the economy regains strength? Only time will tell whether the relationships established in the tough times will be strong enough to make it.
Data Breaches Break the Bank
Paying the price for data breaches goes beyond the nickel and dime, involving deeper issues such as loss of customer trust, reports washingtonpost.com. According to a new study by Tucson-based research firm Ponemon Institute, an average of $6.6 million was spent by firms that had experienced data breaches in order to "rebuild their brand image and retain customers." Costs averaged $202 per compromised customer record, and included hiring forensic experts, costs associated with notifying customers such as setting up telephone hotlines, and discounts applicable to future services and products. Indirect but equally significant are costs that are less tangible—customer turnover due to loss of trust. Says Gerhard Watzinger, of computer security firm McAfee, "We're seeing a shift in attitude about these preventative technologies from one of a cost center to being a potential revenue generator. With all of these well-publicized data breaches, companies are finding out how expensive it is to repair things after the fact because the pain organizations suffer from a data breach now is pretty high."
Classroom Wait-Out
Looks like business is booming . . . in the classroom? The Wall Street Journal reports that despite the woes in the legal job market, law schools are experiencing an upward surge in applications. Applications to Washington and Lee University in Virginia rose 29 percent from last year, while the University of Texas School of Law and Yale Law School both have seen an 8 percent increase in applications. Across the nation, total applications are up by over 2 percent from last year. Educators surmise that college grads are seeking safe harbor from the economy in higher education, anticipating that the job market will improve while they wait it out. Richard Geiger, associate dean of enrollment at Cornell University Law School, which has seen applications rise 8 percent, says "there are a lot of people who have decided they will not test the job market as a graduating senior from college." School administrators point out that a law degree is a solid investment and that lawyers will play a central role in a variety of fields affecting the economy for years to come. University of North Carolina in Chapel Hill senior Claire Arnett put her plans to move to New York City after graduation on hold and, instead, applied to law school, reasoning that a law degree is useful in a variety of fields, not just the law. Says Ms. Arnett, "Whether I end up practicing, I feel like it's a good degree to have."

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