Tax and finance boutique McKee Nelson announced Monday it was laying off 13 associates in New York and four in Washington, D.C., in response to the "unprecedented devastation" of the credit markets.
In a statement, the firm stressed the layoffs, which will reduce the attorney headcount to 174, were not performance-based.
"We have analyzed and created a projection of what we believe the structured finance business will look like over the next two years and what resources, capabilities and experience will be required to do that work," the firm said. "This layoff is a necessary part of the firm's adjustment to this new reality."
Launched in 1999 as a law firm offshoot of accounting giant Ernst & Young, McKee Nelson has long focused primarily on tax and structured finance, with the latter specialty once accounting for 60 percent of the practice. But structured finance, which takes in the bundling of mortgages into tradeable securities, was decimated by the subprime crisis and McKee Nelson last winter began offering buyouts to lawyers willing to quit the slowing practice.
In an interview Monday, firm co-chair Reed Auerbach said 24 lawyers took buyouts at that time and the firm has embarked on a diversification plan aimed at making litigation another pillar. He noted that the firm last year welcomed a litigation group from King & Spalding.
Auerbach said structured finance was now only around 28 percent of the firm's revenue and focused more on restructuring and repackaging mortgage-backed securities than their issuance.
Though boutique firms often seek mergers with larger firms to weather poor economic times, Auerbach said McKee Nelson wanted to remain independent. "Everyone here came from a big firm," he said. "I think I would get lynched if I even proposed [a merger]."
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