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Clifford Chance has laid off 20 U.S. litigation associates, citing continued “sluggishness” in the practice. The cutback affects 17 associates in New York and three in Washington, D.C. In a statement released Tuesday, the firm stressed that the layoffs were not performance-related and said the affected associates would receive severance and outplacement assistance. Though a number of law firms have already announced significant layoffs in response to slowing economic conditions, most have been in practices tied to the hard-hit market for mortgage-backed securities. Clifford Chance was itself one of the first firms to cut structured finance associates last fall, when it fired six. But litigation is typically perceived as a countercyclical practice, and many have expected an unprecedented economic crisis to likewise produce an unprecedented bonanza of litigation. Mark Kirsch, Clifford Chance’s global litigation chair, said his firm resorted to layoffs largely because the expected uptick was not materializing. “Clearly, there’s still some uncertainty,” he said. “People were predicting a tsunami of litigation, but so far it hasn’t come.” Kirsch said there had been some increase in multi-jurisdictional regulatory and securities litigation. But he said that had been countered by a drop-off in intellectual property and general commercial litigation. Many still expect a boom in litigation. Fulbright & Jaworski on Monday released a survey of in-house lawyers in which the vast majority predicted an increase in disputes. Law firms have traditionally been loath to engage in layoffs because the resulting reputational harm can hinder efforts to recruit new talent, especially from law schools. But each major economic downturn of the past two decades has nonetheless produced a large number of laid-off lawyers. In the current downturn, securitization giant Cadwalader, Wickersham & Taft has already fired more than 130 lawyers. Thacher Proffitt & Wood, another major player in the structured finance area, also has had significant layoffs. One major firm, San Francisco-based Heller Ehrman, has announced its intention to dissolve. The scale of law-firm layoffs remains small, however, compared to those roiling Wall Street, and the drop-off in business from contracting or consolidation financial institutions is expected to hammer major law firms for months to come.

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