Ten U.S. partners and two dozen associates have voluntarily left Thacher Proffitt & Wood in the past six months after a severe slump in structured finance.
The slump has prompted the New York-based firm to cut at least 60 associates from its payroll.
Some former partners, speaking on condition of anonymity, said the departures come as firm profits are anticipated to slide substantially in 2008.
Last year, Thacher Proffitt reported slightly more than $1 million in profits per partner, down about 22 percent from 2006, according to The American Lawyer. Other departing partners downplayed the significance of the firm's finances in their decisions.
Most of the departing partners are not in structured finance, which, along with related areas such as real estate, made up more than half of the firm's revenues before the layoffs. Last fall, Thacher Proffitt let go 24 associates, the first major layoff among law firms in the recent economic downturn. Since then, the firm has conducted two more rounds of cuts, offering buyouts to associates, said Paul Tvetenstrand, chairman and managing partner of Thacher Proffitt.
He said the recent partner departures were unrelated to the layoffs. But he acknowledged that the total number of them was "a lot, for a short period of time."
"It's a tough marketplace to be in," Tvetenstrand said. "I would fully expect in 2009 to bounce back to the levels we had beforehand. But I don't know what 2008 will be."
Thacher Proffitt is one of the first law firms to lay off associates in recent months. Since then, Cadwalader, Wickersham & Taft of New York; Sonnenschein Nath & Rosenthal; Thelen Reid Brown Raysman & Steiner; and McKee Nelson of New York have laid off dozens of associates.
Since then, Thacher has suffered from additional departures.
Some former partners raised concerns about the firm's profit projections for 2008, which were alarmingly reduced as the year progressed. They said that partners who chose to stay at Thacher were taking a financial risk.
In March, V. Gerard Comizio, a banking partner at Thacher Proffitt, joined Paul, Hastings, Janofsky & Walker's Washington office. He declined to comment.
A month later, Christopher F. Graham, the former head of Thacher Proffitt's bankruptcy practice, joined McKenna Long & Aldridge's New York office. Graham also declined to comment.
That same month, two other partners, Steven R. Howard and Thomas M. Majewski, who focus on mutual funds and hedge funds, joined Bingham McCutchen. Neither returned a call for comment.
Robert Villani, a securitization partner who joined Clifford Chance's New York office last month, also declined to comment.
A 'BETTER PLATFORM'
The latest to leave, Robert Klausner, a commercial real estate partner, joined Day Pitney, along with two associates. "Thacher was so structured-finance oriented," he said. "And, obviously, the economy had something to do with my decision." But ultimately, he said, "I have a better platform at Day Pitney than I have at Thacher."
Several other departing partners also sought a better fit for their practice areas.
In February, Kevin Plunkett, a government relations partner, joined DelBello Donnellan Weingarten Wise & Wiederkehr, based in White Plains, N.Y. Plunkett, who was joined by two associates from Thacher Proffitt, said his practice, which is focused on regulatory issues and commercial litigation, fits better near courthouses and the suburbs than in New York City.
A month later, Thacher Proffitt's Latin America practice, which included about two dozen lawyers in litigation and corporate law, joined New York's Chadbourne & Parke. Two partners in that practice, Oliver Armas and Marc Rossell, joined Chadbourne's New York office. Armas, speaking on behalf of the group, said three partners joined Chadbourne in Mexico City, where the firm has since opened an office. About 20 associates joined as well.
He said the Latin America practice group wanted to open an office in Brazil -- a plan that Chadbourne intends to execute later this year.
Joseph Grasso, an insurance litigation partner who, in April, joined the Philadelphia office of New Haven, Conn.-based Wiggin and Dana, said he left in order to shorten his commute. But he agreed that Thacher Proffitt "definitely felt the impact of the subprime crisis, and now the economy."
In the past six months, Thacher Proffitt has hired one partner, Hugh McDonald, a bankruptcy lawyer from London's Allen & Overy who is now co-chairman of the newly formed distressed-asset practice group. With the recent layoffs and departures, the firm, which had more than 300 lawyers before last fall's layoffs, now has 224. But Tvetenstrand insists that no more layoffs are planned. He anticipates that real estate will come back, and that "if business picks up, we'll be in the marketplace hiring partners and associates."