A Labor Department audit of the firm’s advice on labor certifications—a probe that was later dropped—made business development “a difficult chore,” Fragomen told Am Law. Then the downturn in the financial services market led to a drop in overseas hiring and visa applications.
The ABA article refers to a more detailed AmLaw Daily article which explains the revenue drop thus:
In November, 2007, the Labor Department announced it was auditing the firm on suspicions that it had been improperly advising clients about labor certification applications. In September, the Labor Department abruptly dropped the investigation. Fragomen says the investigation didn't make a huge impact on the firm’s bottom line, but that it “made business development a difficult chore.”
Just as soon as the Fragomen firm escaped from that dark cloud, the bottom fell out of the financial services market and work from its big institutional clients slowed. Fragomen says he expects the trend to continue. He says he expects work doing H1-B visas, for example, to be off by half in 2009. (The economic stimulus bill that Congress recently approved requires banks and other institutions receiving federal bailout money to give hiring priority to American workers. Also, Fragomen says, clients will simply be doing less overseas hiring. Fees from processing these types of visas accounts for about 10 percent of firm revenue).
Also, there were no real fee increases in 2008, Fragomen says. Toward the end of the year, clients were asking for discounts
However, it was not all bad news for Fragomen:
Despite all the bad news, revenue was slightly up in 2008, about four percent, to $257 million.P.S. Full disclosure - Fragomen was my employer until September 2008.
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