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Morgan Lewis & Bockius is laying off about 50 associates, almost all of them from the firm’s U.S. offices, according to the firmwide managing partner for personnel. The managing partner, Michael Kelly, who is also managing partner of the firm’s largest office, in Washington, D.C., said 15 Washington associates would be let go. He did not specify how many would be laid off in other offices, but he said the Philadelphia, New York, Los Angeles and Miami offices would be affected. The firm employs about 1,100 lawyers worldwide. Kelly said associates were being cut from the firm’s transactional practice as well as its labor and employment and litigation groups. The firm is providing severance packages, Kelly said, consisting of “some months of salary continuation and benefits.” “These are good people. These are good lawyers,” Kelly said. “I don’t want any suggestion that these people can’t cut it in a big law firm.” The firm’s management committee determined two weeks ago that “this was the right business decision to make,” Kelly said. “We don’t think it’s a good idea for the firm or for our lawyers to keep a workforce that’s not aligned with the work.” Kelly said the firm had overestimated the rate of growth in client demand. “We made a good faith prediction that business would continue to grow,” he said. “In fact it did [during this year], but not at those astronomical rates” that were the hallmarks of 2000. Kelly said the challenge of managing during a slowdown in business had been compounded by a drop in the firm’s attrition rate. “We have a fairly predictable turnover rate,” he said. But amid this year’s economic slump, he said, “half of those you would have predicted would leave did so.” Kelly said recruiting concerns prompted the firm to lay off associates rather than rescind offers to new hires. “When we make offers, we don’t want people to think we renege,” he said. “The long-term cost would be too great.” Partners will feel the pain of the economic slump as well. The point values that determine equity partner compensation “will be significantly lower than last year,” Kelly confirmed. He said the value of a point would drop by 5 percent to 10 percent. “If partners aren’t doing what’s necessary, they will be dealt with,” Kelly said. Led by Philadelphia-based partners Steve Goodman and David King, who has since left the firm to go in-house, Morgan Lewis cashed in on the venture capital explosion of the late 1990s, as the emerging business and life science practices became the dominant forces within the firm’s business and finance department. So successful was the practice that the firm franchised it from Philadelphia into other markets such as Pittsburgh, Princeton and Northern Virginia and hired a bushel of lateral associates to deal with the overflow of work. But when the IPO market dried up in a matter of months last year, Morgan Lewis was left in a bind, several sources familiar with the firm have said. The lateral hiring binge of the past few years left the firm with far too many associates for the amount of work available in the venture capital/emerging growth area. Early this year, the firm informed six associates — which included five members of the business and finance department — that “they no longer have a future with the firm,” according to an interview this spring with the Philadelphia office managing partner, Howard Meyers. Meyers said at the time that it was merely part of an annual evaluation process, that no pink slips were handed out, and there was no tight timetable given for their departures. In July, it was learned that three more Morgan Lewis associates, all in the business and finance group, were given similar news. All but one of these associates were members of the business and finance department in Philadelphia. During that spring interview, Meyers also said that the firm had been actively hiring in most practice areas — intellectual property, real estate, litigation and employee benefits, to name a few. While it has not been hiring as aggressively on the mergers and acquisitions side, Meyers said, there have been no layoffs in that area and the firm has seen an upswing in corporate activity in the prior month. “There were no layoffs during the recession of 1991 to 1993, and I certainly don’t see any layoffs in the present economic environment,” Meyers said in the April 16 issue of The Legal Intelligencer. Otis Bilodeau is a reporter with Legal Times and Jeff Blumenthal is a reporter with The Legal Intelligencer , both American Lawyer Media publications.

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