June 23, 2009 at 1:47 pm

Laura Berman

Recession roils legal profession

Lawyer James Porritt added bankruptcy to his specialties, and has seen business soar. (David Coates / The Detroit News)

In a recessionary twist to a bad joke: What do you call 500 unemployed lawyers?

The answer (a good start) might have been a lot funnier when unemployed lawyers -- or journalists, for that matter -- were hard to find.

But a recession that creates new legal problems that require solutions is also causing even the biggest corporate firms to lay off experienced lawyers and staff.

Legal field not immune

In Detroit, Dykema Gossett has eliminated 17 lawyers this year and 20 staffers. At Honigman Miller, managing partner David Foltyn says 11 partners have been terminated. Dickinson Wright and Miller Canfield have also laid off lawyers this year.

At the same time, several big firms have hired lawyers from each other, or acquired law practices in other states with more vital economies.

The Detroit legal air is so heavy with go-for-the-jugular competitiveness that "Of Counsel," a legal trade publication, singled out the Detroit community's "Motor City Madness" in an article headlined, "Amid Recession, Detroit Law Firms Expand, Contract, Bicker and Bite Back."

Real estate lawyers, in particular, are suffering from the collapse in markets here and across the country. "Traditional real estate is very slow," says Foltyn, and deal-making is instead in alternative energy and affordable housing.

Bankruptcy begets boom

Even in the midst of cutbacks, bankruptcy law is not so unexpectedly bustling.

So many lawyers have moved into the specialty that David Ruskin, the Chapter 13 trustee for the Detroit bankruptcy court, has opened his Southfield office conference room to a series of brown bag lunches where fresh bankruptcy lawyers can hear from more seasoned ones.

James Porritt, a Lake Orion lawyer who specialized in real estate, recounts a painful few years watching clients collapsing on the office couch, sobbing in despair: They were no longer buying dream houses or investment property. They were losing their homes, their possessions, their livelihoods.

"There's a pent-up emotional distress with clients that's difficult to witness," he says. Last year, he studied bankruptcy law, learned the new computer system at the federal bankruptcy court and adapted to the new reality. At 61, he's adding bankruptcy as a specialty, studying the federal bankruptcy code and taking on cases that a year ago he would have referred to other lawyers.

In less than a year, without advertising, bankruptcy has become almost 50 percent of his practice.

But the bankruptcy boom won't last. "You can't thrive on bankruptcies forever," says Foltyn.

If you think about it, that's a good thing.

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