Money manager Legg Mason's name is emblazoned on one of Baltimore's newest skyscrapers, but the prominence obscures that the company's workforce in the city is about a third of what it was in 2005.
Legg employs about 330 people in Baltimore today, down from 1,200 in the city and 900 elsewhere in Maryland in 2005, when it was one of the city's largest employers.
Since then, Legg has sold off chunks of its business, downsized during the Great Recession, and focused much of its renewed growth toward acquiring affiliate investment management firms outside Baltimore. It now has nearly twice as many employees in New York City as it does in Baltimore, and that number is expected to grow — Legg announced in January it would buy stakes in two New York-based investment firms.
Despite the shift in its workforce, Legg CEO Joseph A. Sullivan said the firm remains loyal to Baltimore.
"Our commitment to Baltimore isn't diminishing, it's strengthening," Sullivan said. "The commitment to Baltimore is much deeper than just adding 10 more people or 20 more people, it's about the people we have here and their commitment to being involved in the community."
Legg not only is in the middle of a 15-year lease on its headquarters offices in the blue-glass tower on the Harbor East waterfront, but it's a major supporter of local nonprofit and charitable organizations with both money and volunteers.
While some observers expressed surprise at how much Legg has shrunk in Baltimore, they acknowldege the shift reflects not only a change in the firm's post-financial crisis business strategy but the changing nature of the financial industry.
"There was a time when German Street, now Redwood Street, was known as the Wall Street of the South ... but that's no longer the case," said Anirban Basu, an economic consultant and head of Baltimore-based Sage Policy Group. "Baltimore still has a meaningfully large financial services sector, but it's not as dominant as it once was, and it certainly pales in comparison to the financial sectors in other cities."
Richard Clinch, an economist and the director of the University of Baltimore's Jacob France Institute, said many cities, such as Charlotte, N.C., and Richmond, Va., were seeing the same phenomenon, as financial services jobs shifted to hubs in New York City and London.
Legg's decline as a big employer in Baltimore happened in stages.
In 2005, Legg traded its brokerage unit for the money management business of financial giant Citigroup Inc. in a $3.7 billion deal in 2005. About 1,000 employees in the state went to Citigroup's Smith Barney brokerage firm, while 300 went to Stifel Financial Corp., which quickly acquired Legg's investment banking, research and trading operations, from Citigroup.
More jobs were lost amid downsizing during the 2008 financial crisis and subsequent recession. In 2010, Legg closed its office in Owings Mills and shifted all operations to Baltimore, laying off about 250 there and in Baltimore.
When it merged the Legg Mason Capital Management subsidiary into another affiliate, New York-based ClearBridge Investments, in 2013, even more jobs were lost in Baltimore, though the company wouldn't disclose how many.
Another 50 jobs shifted to Stifel in 2014 with the sale of Legg's Investment Counsel & Trust Co. unit.
Meanwhile, Legg has acquired stakes in several affiliate companies, broadening its operations worldwide. It now has about 3,000 employees around the world in locations such as Australia, Stamford, Conn., Hong Kong and Dubai.
It bought ClearBridge in 2005. The Permal Group, also acquired in 2005, is headquarted in New York City and will be merged with New York-based EnTrust Capital, Legg announced in January.
Legg also announced in January it would acquire a majority of New York-based Clarion Partners, a real estate investment firm with about 280 employees. Legg also announced in January a stake in another company, Precidian Investments, which is based in New Jersey.
Many of the jobs that Legg shifted in the last decade actually remained in the city.
Morgan Stanley, which acquired Smith Barney in 2009 and inherited many former Legg employees, maintains a significant presence in Baltimore, with 1,255 employees, said James Wiggins, a spokesman for the New York-based financial firm.
Stifel representatives did not respond to requests for comment, but the firm leases 111,000 square feet of office space here, according to recent documents it filed with U.S. Securities and Exchange Commission.
Unlike Legg, T. Rowe Price Group, the other large money manager headquartered in Baltimore, has added staff in the city in the past decade. In 2005, it had about 1,170 employees downtown, compared with about 1,300 employees downtown today, according to spokesman Brian Lewbart. T. Rowe also added about 1,000 employees at its Owings Mills campus.
Mac Sykes, an analyst at Gabelli & Co. in Rye, N.Y., said Legg's workforce shift is simply a reflection of its affiliate strategy.
"I don't necessarily think that's a negative connotation for Baltimore, it's coincidental with [Legg's] corporate strategy at the moment," Sykes said. "They have a history with the city, they spent significant capital on a headquarters there."
Legg moved into the 24-story waterfront office tower that bears its name in 2009 after signing a 15-year lease for up to 400,000 square feet. It has subleased some of the space since then to the Johns Hopkins Carey School and other tenants. H&S Properties Development Corp., which developed the tower and owns it, listed it for sale last year.
When the lease is up, the company expects to stay, Sullivan said, "assuming we can get a reasonable deal."
Legg sponsors many charities in the Baltimore area, ranging from St. Ignatius Loyola Academy and Living Classrooms to the Walters Art Museum.
Legg's assistance over the last decade has helped St. Ignatius, a tuition-free private school that educates low-income, middle-school boys in Baltimore, sponsor students and move into a renovated building so it could serve more, said Katie White, the school's spokeswoman.
Sullivan also has given individually to the school and has served on its board, she said.
"They just in general as a company have been very kind and influential on our growth," White said.
Legg executives and employees also volunteer at Living Classrooms, the nearby nonprofit that offers education and job training using boats, playing fields and community centers as its "living classrooms." The company has donated hundreds of thousands of dollars over the last five years, including about $60,000 last year, said James Piper Bond, the nonprofit's president.
"Even though their workforce has diminished in numbers, they continue to stay involved in rolling up their sleeves and helping Living Classrooms and the city," Bond said.
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There are some benefits to Legg remaining headquartered in Baltimore, said Karyl Leggio, a finance professor at Loyola University Maryland.
Many talented employees may prefer the lifestyle here and wouldn't want to relocate, she said.
"Baltimore is one of those cities that people are really committed to; they love the lifestyle," she said. "From a financial standpoint, would it make more sense for them to be in New York? It's hard to say. Oftentimes, there's a lot of people who don't want to live in New York."
Sullivan said last year's unrest in the wake of Freddie Gray's death from an injury sustained in police custody only strengthened the company's resolve to do more for the community and to stay in Baltimore.
"I think everyone stood back and said we need to find away to double down and do more in the community," Sullivan said. "We've got to make this city an attractive place for companies to relocate and bring jobs, not the other way around. We are very, very proud to be headquartered in Baltimore."