Fried, Frank, Harris, Shriver & Jacobson is taking a scythe to its associate ranks. Firm chair Valerie Ford Jacob and managing partner Justin Spendlove sent a firmwide memo Monday announcing that the firm has laid off 41 associates and 58 staff members. A firm spokeswoman did not immediately return a message from the Am Law Daily, but sources at Fried Frank confirmed the authenticity of the memo; it was first reported on Above the Law.
In the memo, the firm says it "worked very hard to avoid" laying people off, but that "we must respond responsibly to the current environment." The firm is also delaying start dates for incoming associates until January 2010 and paying those lawyers a $10,000 stipend. But the firm is encouraging lawyers to defer starting until next fall and offering a $70,000 stipend to those who take the longer deferral. (The firm will also reduce the length of its summer program to 10 weeks.)
The firm, which has suffered badly from a plunge in corporate work, has long been rumored to be considering headcount cuts. Last year, Fried Frank revenues dropped 9 percent to $488 million, according to our Am Law 100 reporting. That translated into a huge hit on profits, with profits per equity partner plunging 23 percent, to $1.23 million. It was among the steepest profit declines of any firm so far reported. In mid-March, a firm spokeswoman said that the firm is largely transactional, and that declines were due to a bad year.
Up to now, the firm has taken only small steps to trim its ranks. Last August, even before the credit crisis hit, the 700-lawyer firm trimmed about 10 percent of its administrative staff. Then, in late November, rumors surfaced on Above the Law that the firm had laid off at least 15 corporate associates, including six in the real estate group, in its performance review process. Two weeks later, the ax fell on at least 15 litigation associates. The firm declined to comment on either report.
Corporate work, in particular, appears to have been hit by a slowdown. The value of completed U.S.-sided M&A deals the firm handled plunged 62 percent last year, and announced deals by an astonishing 67 percent, according to Thomson Reuters league tables. It was virtually bypassed for rescue-related government bailout work.
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This article first appeared on The Am Law Daily blog on AmericanLawyer.com.