The slowing economy has hit home at Dechert which just issued layoff notices to 13 associates strictly in its finance and real estate practice, according to a source inside the firm.
Shortly after the firm confirmed the planned layoffs, the source said Chairman Barton J. Winokur issued a statement that the firm would then offer the 13 associates positions in other practice groups.
"Due to the major shift in market conditions affecting client demands in our finance and real estate practice area, we currently do not have sufficient work for all the associates in FRE," Winokur said in the statement. "As a consequence, we have told 13 associates in the U.S. FRE group that we see no demand for them in that group in the foreseeable future. However, due to increased and substantial demand in other practice areas, we will be offering those lawyers the opportunity to work in those other groups."
There was no word as to whether those associates, who had been given severance packages, accepted the revised offer to switch practices.
It was back in August that The Legal Intelligencer highlighted concerns among industry leaders about possible associate layoffs. Since that time, pink slips and "voluntary" departures have only been seen at some of the largest structured finance and real estate shops in the country.
Dechert was the first Philadelphia firm to feel the pinch, originally giving the 13 associates until the close of business Tuesday to leave. No one was asked to leave Friday, the source said.
The firm has not disclosed the market breakdown in terms of which offices were affected or how many if any were laid off in Philadelphia, but only said that is was "U.S.-wide."
There were no layoffs prior to Friday, but some attorneys were shifted into other practice areas, the firm source said. The layoffs constitute less than 10 percent of the 167 attorneys listed in Dechert's finance and real estate practice, which includes mortgage finance, structured finance and securitization, investment, and mergers and acquisitions.
The attorneys who were originally asked to leave were offered three months severance, six months of paid medical benefits and transition placement support, the source said.
The possible departures of the Dechert associates come amid a record financial year for the firm with $836 million in gross revenue and more than $2.3 million in profits per equity partner. Some in the industry pointed out that the 13-potential layoffs are relatively small in comparison to size of the firm and said this doesn't speak to any broader problems at the firm.
Legal blog Above The Law has reported extensively on associate and staff layoffs across the country. The reports included associate layoffs at Thacher Proffitt, Cadwalader Wickersham & Taft and Clifford Chance, mainly in the structured finance, real estate and capital markets practices of those firms.
Friday, Above The Law posted a blog on rumors of low morale at Dechert, questioning whether layoffs were imminent.
Dechert's news would put the U.S. legal scene over the 100-attorney mark in terms of attorney layoffs and offered buyouts this economic cycle. According to data collected by The American Lawyer, 35 attorneys were laid off at Cadwalader Wickersham; 24 Thacher Proffitt mid-levels were offered buyouts plus an additional five first-years took optional buyouts; six Clifford Chance associates were laid off and 23 associates at McKee Nelson took buyouts.
In response to the news about Dechert, most legal consultants didn't seem surprised simply because of the size and profitability model of the firm. The largest firms are hit the hardest and have the most associates to lose, they said.
