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.

Each South Hampton Roads city has a cadre of attorneys on staff to deal with the many legal disputes that come with running a large city.

Sometimes, a case comes along that poses a potential conflict of interest, requires expertise that can't be found in-house, or just takes too much time.

In those scenarios, officials look outside the city attorney's office to hire a private law firm. That gets expensive.

Saddled with long and costly legal battles, Chesapeake and Virginia Beach have paid nearly $9 million to private law firms over the past five years - more than twice the combined amount spent by Norfolk, Portsmouth and Suffolk.

"When we go through and see how much we have spent on outside counsel, I think we can do better," said Chesapeake Councilwoman Patricia Willis, who is a lawyer.

City Attorney Ronald Hallman said Chesapeake is a "growing city and has faced a host of unique legal matters" including opposition to a planned North Carolina landfill, the Battlefield Golf Club fly ash case, and a challenge to a police test by the U.S. Justice Department. All of these cases required specific expertise and lots of time, which equals large bills.

Albany, N.Y., law firm O’Connell & Aronowitz has acquired Dorsey Law Firm in Saratoga Springs, adding 300 clients to its business.

The Dorsey firm, which now shares the O’Connell name, focuses on elder law and estate planning. The Dorsey firm has two attorneys. It will continue to be run by Matthew Dorsey, 43, the third generation to head the firm.

The two law firms announced the deal this week.

“We’ll bring a new group of clients to their business, and they’ll bring to our business a new group of specialties,” Dorsey said. “Both sides are very optimistic.

The O’Connell firm has 24 practice areas, such as health care, bankruptcy, personal injury and commercial litigation.

Terms of the deal were not disclosed.

Dorsey said he was motivated to do the deal as a way to expand the range of services he can offer to clients, a difficult task when the firm was on its own, he said.

In a statement, Jeff Sherrin, president of the O’Connell firm, said the Saratoga location will provide more convenient service for upstate clients. It will also help O’Connell better tap into that market, Sherrin said.

Dorsey said he expects a partner at O’Connell will work out of the Saratoga office a couple of days a week, with other attorneys shuttling back and forth as needed.

“It’s two different geographic areas, but there’s a lot of commonality here,” Dorsey said.

O’Connell now has 37 attorneys, including 30 at its Albany headquarters. The firm also has an office in Plattsburgh, with five attorneys.

The following financial services industry appointments were announced on Monday. To inform us of other job changes, send an email to moves@thomsonreuters.com.

CONSTELLATION WEALTH ADVISORS

The independent multi-family investment company said it hired Christopher Smith as a principal. Smith was a director of the corporate client group at RBC Capital Markets.

LEGAL & GENERAL INVESTMENT MANAGEMENT

Chicago-based investment manager Legal & General Investment Management America said it hired Aaron Meder in a new role as head of U.S. pension solutions. Meder was a managing director and head of asset-liability investment solutions at UBS Global Asset Management.

MAYER BROWN

The law firm said it hired Dallas Parker from Thompson & Knight as a partner in its corporate and securities practice in Houston.

FRANKLIN TEMPLETON INVESTMENTS

The investment company named Adam Gorlyn vice president of its sovereign funds and supranationals group. Gorlyn worked as a portfolio specialist with the Franklin Templeton Fixed Income group.

KNIGHT CAPITAL GROUP INC (NITE.O)

The firm named Didier Bankole vice president of sales for its electronic trading group (ETG) in Europe. Bankole joins Knight from NYSE Euronext (NYX.N) where he was in charge of global account management.

LASALLE INVESTMENT MANAGEMENT

LaSalle Investment Management appointed Andy Watson to the newly created role of head of core funds and separate accounts, continental Europe. Watson previously worked as international director in the company's Paris office.

T. ROWE PRICE GROUP (TROW.O)

The investment management firm named Michael Joehr as a client service executive focused on southern Europe and Switzerland. Most recently Joehr was senior relationship manager with Allianz Global Investors Europe GmbH.