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Cooley Godward laid off 86 lawyers and 50 support staff today, becoming the first Silicon Valley firm to lay off lawyers en masse since the Valley’s sharp economic decline. The lawyer cuts — which represent roughly 17 percent of the firm’s total associate ranks — will be made firmwide and take effect Aug. 31. Laid-off lawyers were given up to three months’ salary in severance pay. “After careful consideration, over a period of months, the management committee believes that this action is necessary to insure the long-term health of the firm,” Cooley Chairman and CEO Stephen Neal said in a memo to employees. “This year’s drop in demand has been as steep as the 1999-2000 increase,” Neal wrote. “We simply have too much capacity for existing and reasonably anticipated business, and we must deal with that situation.” Valley law firms have been trying to avoid layoffs by cutting costs and digging deeper into firm profits to fund operations. The firms, including Cooley, have also been using steeper performance standards to quietly fire at least 100 lawyers this year. Neal said the ranks of associates idled by the technology downturn represent a bigger problem for the firm than a drag on profits. “You can put less money in your pocket, but if you have a prolonged period of time where you have a bunch of young lawyers sitting in their offices with too little to do, it’s not good for anybody,” said Neal. The lawyer layoff targeted the firm’s younger ranks and the newly hired. The majority of people laid off have been at the firm for two years or less, Neal said. Lawyers at competing firms reacted with shock at first. One senior partner said, however, that it wasn’t surprising. “We fully expected that someone would be the first to blink,” the partner said. “It wouldn’t surprise me if other firms followed.” Like many Valley firms, Cooley had bulked up in recent years in response to the booming dot-com-fueled economy. In 2000 alone, the firm hired 180 lawyers. While other firms have cut staff and trimmed expenses, laying off associates is seen as a last option. But some firms may have no choice, particularly if the economy doesn’t rebound by early 2002. The three most active firms in the securities area, Cooley, Wilson Sonsini Goodrich & Rosati and Brobeck, Phleger & Harrison, bulked up to handle 373 initial public offerings in 1999 and 2000. But in the first six months of this year, the three firms did eight IPOs among them. That has left associates with little to do. Average billables per lawyer at Cooley are down 15 percent to 17 percent. Partners at Cooley said they regretted having to fire their young hires. “Clearly, this is the hardest thing I’ve ever had to do in my 19 years with the firm, ” said Mark Tanoury, a Cooley partner. “ But I really think this is the right thing for the firm.” The firm did not immediately divulge which offices would face the biggest cuts. Palo Alto, Calif.-based Cooley has large outposts in San Francisco and Reston, Va., as well as a pair of offices in Colorado. Neal would only say the cuts were being made firmwide. The firm said its work force after the cuts will be 1,369 employees — including 560 attorneys.

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