Perkins Coie, the biggest Seattle-based law firm, is suddenly a bit smaller

The biggest Seattle-based law firm, Perkins Coie, last week carried out the first substantial layoffs in its history and froze salaries for staffers who aren't lawyers.

It's the latest in a wave of cuts at top law firms nationwide, driven by a sharp downturn in corporate legal work.

Perkins Coie cut loose 12 associates — meaning attorneys who haven't made partner yet — and 26 other staffers in Seattle, Bellevue, San Francisco, Menlo Park, Calif., and Chicago. That's 2 percent of its total head count.

Other economy measures already imposed this year at Perkins include: a 10 percent reduction in budgeted income for the firm's partners; a pay freeze for associates; and a three-month delay for new associates scheduled to join the firm in the fall (with a $7,500 stipend to tide them over).

The only previous layoff in its nearly centurylong history came after the dot-com bubble burst in 2001, and was limited to the Menlo Park office, says firmwide managing partner Bob Giles.

This time the slowdown is more widespread. "People just aren't doing deals, particularly in real estate," he says.

Perkins isn't alone. As documented with leaked memos and colorful charts on such Web sites as abovethelaw.com, big firms have cut thousands of employees in recent months.

K&L Gates, formed by the merger of Seattle's Preston Gates & Ellis with Kirkpatrick & Lockhart of Pittsburgh, last month cut 115 associates and staff, according to a memo on abovethelaw. The firm had no comment.

Davis Wright Tremaine, the firm with the third-largest legal shop here, cut associates' salaries by 5 percent and postponed new associates' start date by three months, says spokeswoman Barrie Handy, confirming abovethelaw's account. She says there have been no layoffs. (The Seattle Times is a client of Davis Wright.)

At Perkins, says Giles, revenues last year grew to $422 million from 2007's $395 million, due in part to picking up some lawyers in Madison, Wis., when San Francisco-based Heller Ehrman disbanded. That expanded the firm to 15 offices, from Shanghai to Washington, D.C.

He's budgeted 2009 revenues to nearly match last year's but cautions "the pipeline is very uncertain right now — it's very hard to predict what work is going to look like."

Why are the cuts coming now? Giles, a veteran of several economic downturns, says law firms "typically lag the rest of the economy" by three or four months going into a recession — "and the same at the other end."

Meanwhile, recession-battered clients "are putting a lot of pressure on us" to minimize legal bills, he says. Interest is growing in alternative billing arrangements for litigation, such as reducing Perkins' hourly rate but giving it a share in the winnings if a client prevails.

Boeing tanker,

EADS transport

a fair swap?

If the international military aerospace game were played more like Monopoly, analyst Richard Aboulafia would have a swap that could end the two procurement debacles haunting the defense establishments of Europe and the U.S.

Those twin problems are the seemingly endless standoff between Boeing and Airbus parent EADS over an Air Force refueling tanker, and the disastrously delayed military transport plane ordered from EADS by numerous European governments.

The acerbic and insightful aerospace observer has a modest proposal: The Europeans should kill their budget-busting transport, the A400M, and buy U.S.-built C-17s and C-130Js made by Boeing and Lockheed, respectively.

In exchange, the U.S. Air Force should buy tankers based on the Airbus A330, not Boeing's proposed 767 tanker. The purchases work out to $26 billion to $27 billion going each way, he says.

We all know plenty about the tanker contretemps. As for the A400M, its delays could cost EADS $8 billion if European governments insist on the penalties to which they are entitled.

Aboulafia says that for EADS, signing on to the transport project was "like a healthy person taking a suicide pill so he can cash in on his life-insurance policy."

Aboulafia, an analyst for Teal Group, sees lots of upside in his hypothetical deal: "The USAF gets a great and badly needed tanker with additional cargo room. Europe gets two extremely reliable and robust lifters that offer much greater capability and efficiency than a single air-lifter model." Avoided costs for all the nations involved would amount to many billions — "it's win-win," he says.

Of course there would be losers. "Spain would take a hit, as would Kansas and the Puget Sound area," as manufacturing sites for the A400M and the Boeing tanker. "But France, the UK, Germany, California, Georgia, Connecticut, Indiana, and all countries involved would come out way ahead."

Despite its logic, Aboulafia acknowledges, "the transports-for-tankers plan is probably doomed" because even with U.S. and European leaders more collegial than in the Bush era when these projects were launched, "parochial interests trump national and global leadership almost every time."

Comments? Send them to Rami Grunbaum: rgrunbaum@-

seattletimes.com or 206-464-8541

Information in this article, originally published April 19, 2009, was corrected April 21,2009. A previous version of this story incorrectly stated that the law firm Davis Wright Tremaine was based in Portland. It is based in Seattle.