Semmes cuts 25% of support jobs

April 08, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

Semmes, Bowen & Semmes yesterday unveiled a reorganization that eliminates 44 administrative and support jobs, a move the law firm expects will save $1 million annually and ensure its survival.

Semmes' decision to cut one quarter of its staff comes in response to the departure of 17 partners in the past year -- and six in the past two weeks. In recent weeks speculation has mounted that the 90-year-old firm would dissolve because of a loss of revenues and competitive industry pressures.

With the departures, Semmes now has roughly 85 attorneys and 131 support and administrative staff, down from the nearly 200 ++ attorneys who practiced there a decade ago. Just a few months ago, Semmes had 275 people on its payroll. Yesterday's layoffs stopped short of Semmes' remaining 28 partners and 51 associates.

"Today was a very hard day," said Cleaveland D. Miller, Semmes managing partner since January 1994. "There were some tears, and naturally so. But our situation is similar to any business that has needed to cut its overhead and remain competitive. Legal services today are viewed as an expense that needs to be managed."

Semmes intends to focus on 14 different areas of law, such as product liability, environmental law, workers' compensation, business litigation and international law, and to keep its five offices in Baltimore, Washington, D.C., Hagerstown, Wilmington, Del., and Towson.

Despite the partner losses and cuts, Semmes will remain among one of the 10 largest law firms in Maryland.

Mr. Miller cited increased competition from a number of sources -- including other large law firms, "boutique" firms specializing in limited practice areas and increased corporate in-house legal staffs -- as reasons behind both the partner departures and the need to streamline.

"One of the realities of today is that there's an oversupply of lawyers," said James L. Shea, managing partner of Venable, Baetjer & Howard, the state's second-largest law firm. "In Baltimore, that's exacerbated by the number of national firms which have opened offices here. I don't see diminishing business, but I do see a lot more lawyers competing."

Money also was a factor in Semmes' decision-making process. Semmes' annual billings declined to roughly $25 million last year, a trend evident since the late 1980s that has had an impact on the amount of profit shared by the firm's equity partners, according to sources familiar with the firm.

"Semmes is profitable, it's just a question of how much so," said Mr. Miller, who declined to provide Semmes' recent annual billings. "I'd say we were not satisfied with the level of profitability in 1994."

Semmes, which counts the Travelers Cos., Chubb Insurance Group, Citizens Bank and General Mills Corp. among its clients, charges between $50 and $300 per hour, depending on expertise and level of difficulty.

In recent years, Semmes also has lost business as Baltimore companies such as Maryland National Bank, Monumental Life Insurance and The Baltimore Sun Co. have been acquired by out-of-town firms and shifted legal work to others.

With the cuts, Semmes intends to boost the firm's profits as a percentage of overall billings to 30 percent from a current level of 23 percent, said Mr. Miller, 56, who joined Semmes in 1963 after graduating from Harvard Law School.

Further expenditures will be necessary, however. Mr. Miller said Semmes expects to spend about $100,000 for severance and other benefits for laid-off employees, and will invest another $200,000 into a new $750,000 computer system to increase automation and efficiency.

The firm also plans to develop accounting systems to track the profitability of its divisions and manage costs, as recommended by accounting firm Grant Thornton, which Semmes retained to assist in its reorganization.

And Semmes will further attempt to reduce its overhead, including its rental payments in the 26-story 250 W. Pratt St. office tower.

On Monday, Mr. Miller has scheduled a meeting with the Yarmouth Group Inc., the New York pension fund adviser which bought the debt on the skyscraper in December for $32 million, to discuss rent reduction.

In December 1992, Semmes renegotiated its lease with then-lender Chase Manhattan Bank which allowed the firm to trim its space and rent rate there by one-third. Semmes is the building's largest tenant, occupying four floors containing 75,000 square feet.

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