Mayer Brown continues to hemorrhage lawyers, despite what the Chicago law firm says are "encouraging signs" for 2010.

The international firm said Thursday that laid off 28 lawyers in its U.S. offices, which represents 3 percent of the approximately 925 U.S. lawyers. The layoffs did not affect partners, only associates and lawyers known as "counsel" who are not on partnership track.

Mayer Brown also reduced its administrative staff by 47 people.

This is the third job reduction since November 2008 at Mayer Brown. The two previous rounds affected at least 78 lawyers. The firm blamed the previous downsizing on the recession, which cut demand for legal services. It said Thursday that demand has bounced back but not enough. In addition, voluntary attrition has dropped, meaning that the firm was overstaffed compared to anticipated demand for legal services this year.

"Although most of our practices are performing well, overall demand for legal services has not recovered fully, and in today's tight legal job market, voluntary lawyer departures have been significantly lower than our normal levels," Chairman Bert Krueger said in an e-mail to U.S. offices. A Mayer spokesman provided a copy of the e-mail but declined further comment.

The layoffs come as Mayer Brown partners are scheduled to gather in Chicago later this month for the firm's annual meeting.

While stating that the layoffs were necessary, Krueger ended his memo touching on the firm's financial performance. "Thus far, the year off to a positive start."

The pace of layoffs across major U.S. law firms has slowed down compared to a year ago, when nearly every large firm resorted to job cuts to save their bottom lines.

One of Baltimore's largest law firms, Ober Kaler, will move its headquarters by next April from the Sun Trust Bank building downtown to the 100 Light Street office tower a few blocks away.

Lexington Realty Trust, which owns the 35-story office tower, announced Thursday that Ober Kaler has signed a lease for 94,213 square feet over six floors of the tower, formerly known as the Legg Mason building.

The lease is the largest announced since Legg Mason moved last year to a new building in Harbor East, vacating 330,000 square feet on Light Street. To attract new tenants, Lexington Trust is investing more than $43 million to upgrade the building and open a parking garage across Lombard Street.

As of July 1, the 100 Light Street building is expected to be approximately 44 percent leased, according to Lexington Trust.

Ober Kaler Chairman John Wolf said the law firm considered sites in Hunt Valley, Owings Mills, Towson, Harbor East and elsewhere in Baltimore's central business district, including its present location, before leasing space at 100 Light Street.

Big blue-chip law firms are losing potentially lucrative assignments to smaller firms even as the industry sees a spike in lawsuits against banks stemming from the financial crisis.

The reason for the change: ethics rules that govern conflicts of interest for lawyers and their firms.

Law firms usually can't sue or investigate banks that they have represented, unless the clients take the unusual step of waiving the conflict. Thus, many small to midsize firms, which count fewer banks as defense clients, are filling a growing demand for conflict-free lawyers able to file lawsuits against banks.

Litigation against banks includes claims that they misstated the value of mortgage-related securities or reneged on financing agreements. Ambac Assurance Corp. recently sued a unit of Credit Suisse Group, alleging the securities firm made misleading representations about attributes of home-equity lines of credit backing bonds the insurer guaranteed. A Credit Suisse spokesman says the suit lacks merit. Last year, MBIA Insurance Corp. sued Countrywide Financial Corp., now owned by Bank of America Corp, claiming it misrepresented the quality of mortgage-backed securities. Bank of America declined to comment.

Consolidation in the banking business has made it only harder for law firms to handle lawsuits against banks. It is increasingly difficult, lawyers said, for firms to find a major bank they haven't represented at some point. As a result, they are bumping up against the conflict-of-interest rules formulated by the American Bar Association and state bar groups.

Dick Heller, the plaintiff in the landmark Supreme Court case, had challenged the new regulations, claiming the registration procedures, a ban on most semiautomatic weapons and other limitations violated the intent of the high court's decision.

U.S. District Judge Ricardo M. Urbina sided with the city, saying the Supreme Court decision did not ban reasonable limits on gun ownership designed to promote public safety.

"While the (Supreme) Court recognized that the Second Amendment protects a natural right of an individual to keep and bear arms in the home in defense of self, family and property, it cautioned that that right is not unlimited," he wrote.

The decision by Urbina, who was appointed by former President Bill Clinton, moves the case along what is likely to be a lengthy path through the legal system.

"We fully expect to go the Court of Appeals," said Heller's lawyer Richard E. Gardiner.

The McLane Law Firm with offices in Manchester, Portsmouth, and Concord, and Woburn, Mass., announced that the firm has absorbed the Colucci Norman Law Firm, of Beverly, Mass.

John Colucci, William Norman, Larry Plavnik, all corporate lawyers and Andrew Botti, a litigator, join McLane's business-focused firm of more than 90 attorneys, 44 of whom actively serve Massachusetts businesses in some capacity.

The addition of these attorneys and associate support staff necessitates the second office space expansion within a year at the TradeCenter, McLane's fourth location.

A new report warns law firms that they need to modernise or lose out as a major power shift is taking place in favour of the in-house client.  The report, which canvassed the opinions of 130 General Counsel and 80 law firm partners around the world, reveals that 78% believe that the recession will have a lasting impact on the profession, and that value and efficiency are now the non-negotiable attributes a client looks for in a legal partner.

The report – ‘Law firm of the 21st century – The clients’ revolution’ - commissioned by international law firm Eversheds, also reveals that the recession has had a major impact on how ‘magic circle’ law firms are viewed, with just over half (51%) of clients and 46% of partners citing the term as defunct.  When asked if this revision, to the traditional law firm hierarchy would be a welcome development for the market, an overwhelming 94% of clients and 81% of partners agreed. 

While the recession has proved to be a key catalyst for this change, the report also highlights several other factors that have contributed.  The primary factor identified by over a third (37%) of all respondents was globalisation, particularly the move to the East, with many international law firm leaders, as with other business sectors, considering moving their headquarters from the West to the East.

An additional driver for change is the increasing status and professionalism of the in-house lawyer (35%).  Three-quarters (74%) of General Counsel said they now occupied a far more senior commercial advisory role in their companies compared to before the recession, with 55% assuming more responsibility for corporate governance.