Latham & Watkins has confirmed to The Am Law Daily that it is laying off 190 associates, or approximately 12 percent of the firm's associate base. The firm also announced cuts of 250 non-legal staff, including paralegals. The announced layoffs are the most dramatic cuts announced so far by an Am Law 100 firm.
After mounting speculation, firm chairman Robert Dell confirmed Friday morning that the firm had little choice given the current economic climate. "It's with profound regret that we're taking this action," he says, adding that the depth of this recession was unprecedented. "The health of the global economy is likely to remain poor this year and so staffing levels have to be better aligned with client needs."
Latham's 550 strong partnership will be unaffected by the cuts, says Dell, explaining that "current and future client demand would likely require less leverage."
The cuts will fall predominantly in U.S. offices. New York, the firm's biggest office with over 350 lawyers, and Los Angeles will be particularly impacted. In London, 12 to 15 jobs are under review.
All those affected are being offered severance packages of six months' pay, capped at $100,000, and six months' medical coverage. Dell describes the package as "quite a bit above the market."
Latham has been one of the banner firms of the Am Law 100 over the past decade, growing aggressively across the U.S. and around the world, fueled in part by its finance and private equity practices.
Speculation had been mounting for several weeks that Latham was due to announce cutbacks. Earlier in the week, the blog Above the Law reported that cuts were expected this week although the scale of the layoffs is above most predictions.
Dell claims that accusations of stealth layoffs are "just false" and insists that the cuts will not damage the firm's reputation. "People recognize that when you look around you can see clients and other firms going through this sort of decision," he says.
In addition to the layoffs, Latham is asking its incoming class of first-years, originally scheduled to join in the fall, to defer start dates until sometime in 2010. The firm will pay those who defer $75,000 to cover that period.
The cuts come off the back of a dramatic fall in Latham's profits in 2008. Profits per equity partner dropped 21 percent from $2.27 million to $1.8 million while revenues fell 4 percent from just over $2 billion to $1.9 billion. Dell stresses that the firm was still confident about the firm's business but again stressed that the firm had an "over-capacity issue that we have to deal with."
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This article first appeared on The Am Law Daily blog on AmericanLawyer.com.