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July 22, 2009 7:31 AM

The Pro Bono Report: No Excuses for Firms with Falling Pro Bono, Declining Revenue

Posted by Drew Combs

Until last year, pro bono hours and financial performance have steadily increased at Am Law 200 firms. And while the economic meltdown has halted ever-improving profit margins, pro bono hours continued their rise in 2008 at the nation's 200 highest-grossing firms. Last year, lawyers at these firms spent an average of 61 hours on pro bono matters, more than a seven-hour increase since 2007. However, the divergent pro bono commitment and financial performance arrows weren't the story at every firm. At some firms both arrows were pointed in the same direction: down.

Beset by falling utilization rates, many firms channeled their lawyers' idle time into pro bono last year, which perhaps explains the overall uptick. A lucky few may have been so busy with work that they weren't able to squeeze in the 20 hours that The American Lawyer uses as the minimum annual standard. But we wanted to look at firms that had both a downturn in pro bono hours and their revenue per lawyer, a key financial indicator. If firms didn't increase their pro bono while their finances were slipping, what was the explanation?

Last year, 16 Am Law 200 firms fell into this category, experiencing declining or stagnating revenue per lawyer in conjunction with a drop in their pro bono score (which combines the total number of pro bono hours and the number of lawyers who worked 20 or more pro bono hours) as calculated by The American Lawyer. (Greenberg Traurig and Brown Rudnick experienced RPL drops but did not submit 2008 pro bono numbers.) At all the firms listed, head count grew or remained the same. For some firms, the pro bono score decline was relatively minor, amounting to no more than 4 percent, but other firms saw more precipitous drops that exceeded 10 percent. However, these firms were quick to defend their pro bono record, offering reasons for the drop that doesn't fit perfectly within a large trend or countertrend.

New York-based firm Schulte Roth & Zabel registered the largest percentage drop in its pro bono score for 2008 on our chart, falling 28.4 percent from the previous year. The firm worked 14,492 pro bono hours last year, which was 6,578 fewer hours than in 2007. And the number of attorneys with over 20 pro bono hours went from 210 to 170 over the same period. But according to special counsel Daniel Greenberg, who oversees the firm's pro bono program, it wasn’t last year that was the anomaly but rather 2007. For 2006, Schulte reported 12,725 pro bono hours, with 96 of the firm's attorneys working over 20 pro bono hours.

Greenberg says pro bono hours shot up dramatically in 2007 due to a time-intensive class action that the firm and the New York Civil Liberties Union filed claiming New York state was not meeting its constitutional duty to provide effective counsel to indigent defendants in five counties. A preliminary injunction sought by plaintiffs is pending in trial court, while an appeal of a denial of a motion to dismiss brought by the state is pending before an appeals court.

Fried, Frank, Harris, Shriver & Jacobson offered similar reasoning to explain the 19.3 percent drop in its pro bono score. The firm's 42,163 pro bono hours in 2007 represented a nearly 9,000-hour increase from the year before. A firm spokeswoman would not disclose the atypical matter that led to the bump.

At Cravath, Swaine & Moore, which experienced a 24.4 percent drop in its pro bono score, the challenge has been replacing major pro bono matters that settled in 2007. According to partner Stuart Gold, Cravath is in the process of "filling the pipeline," which can take time because the firm often opts to handle large litigation matters that take advantage of its size and expertise.

King & Spalding also cited several major pro bono matters that concluded or entered a less time-intensive phase, including three death penalty cases, to explain the 13.7 percent drop in its pro bono score, but in an e-mail a spokesperson wrote that the firm was on track this year to make up much of the falloff. "Our 2009 pro bono hours are running 9 percent higher than they were for the same period last year," the spokesperson wrote.

Kathryn Fritz, managing partner at Fenwick & West, which saw its pro bono score drop 18 percent, says the firm has actually been retooling its pro bono program in recent months in an effort to diversify beyond large trial matters, including death penalty cases. "We really put time and energy in providing pro bono opportunities for transactional attorneys, and these matters don’t usually involve a large number of hours," Fritz says. The transactional matters have included mortgage foreclosure intervention counseling and tax assistance for residents of East Palo Alto.

J.S. Christie, a partner at Birmingham-founded Bradley, Arant, Rose & White, where the pro bono score fell 11.6 percent, says that while his firm remains committed to pro bono matters (it is currently representing 16 death row inmates in challenges to their convictions to their sentences), there has been a greater focus on small-scale pro bono matters that are an outgrowth of the faltering economy. The firm has seen increased pro bono requests, for example, from low income people seeking help with uncontested divorces. "The economy has strained marriages, but people aren't able to afford to get a divorce," says Christie, who heads the firm's pro bono committee. (Bradley Arant's merger with Boult, Cummings, Conners & Berry went into effect at the beginning of the year.)

Christie adds, "Sometimes the change from year-to-year flows from what comes in the door and what's happening in society."

Decliners072209

(Click on the chart above for an enlarged view.)

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