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Gray Cary Ware & Freidenrich laid off 46 associates and 68 staff Thursday, joining the long list of San Francisco Bay Area law firms forced to cut the payroll as the economy continues to languish. The cuts represent 14 percent of the firm’s 337 associates and 12 percent of staff at the Palo Alto, Calif.-based firm. “We strained to defer this decision as long as possible in the hope that the economy would turn,” said J. Terence O’Malley, the firm’s chairman. “What we found is our business has essentially been flat over the past six months.” The layoff primarily targeted corporate and transactional lawyers, though other practice groups at the firm’s six offices were affected, O’Malley said. Gray Cary is giving three months’ severance to associates who have been with the firm for more than two years and two months’ salary to associates who have been with the firm for less than two years. Gray Cary had hoped to stave off layoffs by cutting costs and freezing associate salaries at current levels for at least six months. Those moves came in August, however, and the firm has yet to see any cost savings from that decision, O’Malley said. Associates typically receive pay raises or step increases Jan. 1. In addition to the salary freeze, Gray Cary is rolling back first-year base pay from $135,000 to $125,000, so that first-years will not be earning the same as second-years, O’Malley said. Gray Cary is the seventh Bay Area firm to lay off associates since August, when Cooley Godward became the first firm to resort to cuts and laid off 86 associates. Within weeks, Fenwick & West cut 32 of its lawyers. Then in October, Menlo Park, Calif.-based Gunderson Dettmer Stough Villeneuve Franklin & Hachigian laid off 16 lawyers; Oakland, Calif.-based Crosby, Heafey, Roach & May cut 13 associates; San Jose, Calif.-based Skjerven Morrill MacPherson cut 11; Menlo Park, Calif.-based Venture Law Group laid off 10; and Seattle’s Perkins Coie axed seven of its Bay Area associates. In November, San Francisco-based Pillsbury Winthrop cut a total of about 20 lawyers from its New York and Silicon Valley offices. Brobeck, Phleger & Harrison, also based in San Francisco, has avoided layoffs by offering associates buyout packages. Eighty-two took advantage of them. At Gray Cary, reaction among associates to the layoff ranged from anger to support of the firm’s decision. Many associates said they were saddened by the plight of their colleagues who were cut. Still, the move didn’t come as a shock. As one associate put it, “the writing’s been on the wall for some time,” as too many associates seemed to have too little to do. Another associate said he was pleased to see the firm react decisively to a lagging economy. In a firmwide memo about the layoff, O’Malley wrote that the firm had kept to a commitment made last summer of not laying off lawyers in 2001. “Although we have honored that commitment, our hope that the economy would improve during that period has not come to pass,” O’Malley wrote.

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