With a six-month severance package capped at $100,000, Latham & Watkins told the legal industry Friday it intends to continue to lead the pack, even when delivering bad news.

The package, offered to 190 associates as well as 250 staffers, is twice the average of other firms, which have typically provided lawyers three months of severance. Industry observers said that, until Friday, the standard had been two to four months, with some firms providing no severance but three months' notice.

The associates' severance will cost the firm $15 million to $19 million, roughly 1 percent of 2008 revenue.

Consultants and recruiters say the generous packages should help Latham recruit talent when the economy turns around.

But some worried that the size of the layoff -- 12 percent of its associates -- sent a more disturbing message about Latham's outlook on the economy and could hamper its workforce for several years.

"It's a very dismal statement of their view of the economy and the likelihood of a turnaround in the short term. Cutting staffing levels by that margin is not something they can recuperate in two to three years," said Robert Depew, a managing director in the San Francisco office of Major, Lindsey & Africa.

Consultant Wendy Tice-Wallner said firms have to walk a fine line between doing the right thing and at the same time ensuring that the layoff doesn't impact the bottom line "so that the people who remain question the generosity of the package."

"Firms think about severance a lot with respect to the taste that's left in everyone's mouth after a reduction in overhead," she said. "The problem for the firm is the severance is cash out the door for an already strapped year."

Latham also delayed the start date of its incoming associate class until December 2009. It offered $75,000 to graduates who choose to defer a year, until October 2010, in order to work for public interest organizations, according to an internal memo.

"We have arranged a number of opportunities with public interest and community service organizations, but participants may also make their own arrangements," the memo said.

These moves impressed Sari Zimmerman, director of the office of career and professional development at Hasting College of the Law.

"It's all the more important in times of crisis to maintain ethical standards," Zimmerman said. "Employers need to know that the way they act ... really sends a strong message to law students. Law school campuses generate and send news faster than the Internet and the quickest way to sabotage your reputation is act with less than the highest professional standards," she said.

The size of the package offers associates a unique opportunity to re-evaluate their lives, said Stacy Miller, a founder of legal recruiting firm Miller Sabino & Lee.

"It's a moment of great transformation without a doubt. But it's also a moment for people to step back and ask: I'm young, I've got an advanced degree, I've got $100,000 in my pocket: What could I do?" Miller said.

Many of those laid off will be about 25 years old, she guessed, and still without many financial worries, like a mortgage, children or a 401(k) that the recession has cut in half. They've got huge school loans, but a large severance could be used to cut those payments in half and allow for a little adventure or entrepreneurship.

"It will give people the opportunity to have that moment of clarity because perhaps some of these economic shackles have been removed," Miller said.

But consultant Peter Zeughauser said many associates that worked at Latham want nothing else than to work in Big Law.

"Latham did not have 190 duds," he said. "People who go there want to be at Latham."

The size of the package not only preserves Latham's goodwill into the future, but is a recognition of its market position, Zeughauser said. Other firms don't need to offer such a package because they simply aren't in the same market.

"These are people who they recruited dearly and valued greatly, made a lot of money on them and who they'd like to have kept," he said. "It took a lot to recruit these people in the first place. It's only fair to treat them that way on the way out, under the circumstances."