Photodisc Green
In one of the largest cuts of this layoff season to date, Orrick, Herrington & Sutcliffe sent home 12 percent of its nonpartner lawyers on Tuesday.
Worldwide, the firm cut 100 associates and of counsel from a total of 807, and 200 staff. Half of those affected are in the United States, the firm reported, while a quarter each are in Asia and Europe. A firm spokesman said no partners were let go.
The cuts affected all practice areas and each of its 21 offices worldwide. The 1,000-plus lawyer firm declined to discuss which practice areas or offices were most affected. Staff cuts spanned all levels and positions, including two top spokesmen.
This is the second round of layoffs in four months for Orrick, which pinkslipped 40 associates and counsel and 35 staff in November, mainly in its real estate and structured finance practice areas.
Those laid off Tuesday didn't fare as well as those cut in November: They got three months' severance instead of five.
Orrick Chairman Ralph Baxter Jr. said the November cuts specifically targeted slowing practice areas, while this week's reductions are the result of an unprecedented world economic crisis.
Tuesday's move follows a wave of layoffs over the past several months that sent thousands of lawyers packing, most recently 190 associates at Latham & Watkins, 12 percent of that firm's associate workforce. Latham offered six months' severance, capped at $100,000.
Asked whether other firms can be expected to conduct second rounds of layoffs in the near term, consultant Wendy Tice-Wallner said too many rounds of layoffs can erode morale. As painful as it is, it's best to make needed cuts in one fell swoop.
"Most firms would prefer to do one round of layoffs. The ideal situation is to not be doing this very often and to know where you want to be six months or a year from now," she said. "You don't want people waiting for the next shoe to drop."
Tice-Wallner, former chairwoman of Littler Mendelson, said the size of the latest cuts is an indication of what's to come.
"It's not just a slow practice area or underperformer. These cuts are really targeted at keeping the bottom line from becoming intolerable to the owners of the business," she said. "When you are talking about the volume of people you are talking about, you have to be cutting into people who are potential keepers. You obviously are cutting into potential quality lawyers."
Consultant Richard Gary, former chairman of Thelen, said most firms will continue to watch workforce levels closely.
"My guess is that firms are trying to get all of the bad news out of the way at one time and not be revisiting workforce levels every month or two," Gary said. "You may see another round in midyear if there continues to be overcapacity, which is the reason for these layoffs. But I don't expect it to be done on any kind of regular basis."
Baxter said adapting to these times is "part and parcel of leading and managing" a large global law firm. In 2008, there was a time when the firm attempted to avoid layoffs and moved people around practice areas as the slowdown became apparent and the firm "hoped things would return to normal." Now, the scale of the downturn and the risks it brings can't be ignored, he said.
"We are in very uncertain times. We do not foresee this turning around by this fall," Baxter said. "It might, but we can't count on it.
"We can't carry into the rest of this year resources that are significantly beyond what we need to serve our clients as a business," he continued. "That would be imprudent and not in the best interest of those who are counting on Orrick. As hard as it is, we have to act in a way that is economically sound."
See if your law firm is on The Layoff List.
