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Wilson Sonsini Goodrich & Rosati acknowledged Monday that it would be cutting associates to “right-size” under-performing practice groups. “What we need to do is size certain groups to their productivity levels,” said firm Chairman Larry Sonsini. The practice groups most affected are venture capital financings and capital markets, like initial public offerings, Sonsini said. “We built those practice groups very much so in the dot-com bubble,” Sonsini said. The Palo Alto, Calif.-based firm — which has been loath to admit it has been aggressively trimming its associate ranks — told associates in a series of meetings since Aug. 1 that it would be formally laying off lawyers for the first time. How many attorneys will go is still unclear. Sonsini said the firm hasn’t set any targets and is leaving the firing decisions up to partners who head the groups hardest hit by the economic downturn. Since August 2000, when the firm had 679 associates, Wilson Sonsini has shed 168 associates, or about 25 percent of its ranks. The firm has said natural attrition and some performance-related firings contributed to the drop. Meanwhile, every other major Silicon Valley firm did a layoff last year or earlier this year. Because of the timing, Wilson Sonsini’s departing associates were said to be victims of “stealth layoffs.” Sonsini denied the firm has laid off associates, saying the drop in ranks has been primarily through attrition. “We’ve been able to avoid doing a reduction in force because we continue to drive a lot of business,” Sonsini said. The directive to some partners to cut excess associates would not result in significant cuts because many would be redeployed, Sonsini said. He said the firm hasn’t set any targets for a reduction in headcount and, in fact, is growing its ranks in some practice areas. He said the firm is in talks with about two dozen lawyers in Orange County from IP boutique Lyon & Lyon, which announced last week it was disbanding. In a series of meetings with the firm’s associates, John Roos, the firm’s managing director of professional services, told Wilson Sonsini’s 511 associates that some of them would be cut to spare the firm’s bottom line. The associate forums mark the first time Wilson Sonsini is admitting that the downturn is taking its toll on the firm and that partners are chipping away at their biggest expense — associates. Roos was on vacation and unavailable for comment Monday. In the wake of the meetings, Wilson Sonsini associates said they were relieved that the firm had come clean about some of their disappearing colleagues. “The news wasn’t good, but instead of trying to candy-coat the situation, the firm was very clear with the associates that there were difficult economic times,” said one midlevel associate, who spoke on the condition of anonymity. However, Roos reportedly did not call past terminations a layoff, saying instead that the firm cut first its bottom performers when the economy took a nosedive. “That’s the way they continue to characterize it, that ‘we’re moving past the ranks of nonperformers and into the ranks of people who have provided valuable service to the firm,’” said another midlevel associate. The associate added that Roos’ relatively public comments were more candid than some of the private remarks by the partners he works with. The firm’s decision to downsize through performance-based terminations rather than a layoff has fueled gripes from partners and associates that Wilson Sonsini was being less than honest about how it was maintaining its financial performance. While the firm continues to deny it, the associate departures in recent months have been viewed generally as a way to keep the bottom line healthy instead of addressing poor performers. Partners have claimed their approach spared the fired associates the public stigma of being part of a layoff, which they claim always target the poorest performers. Another partner, who spoke recently on the condition of anonymity, put it this way: “People think there’s an organized conspiracy, but there isn’t. Each group decides. One group may do it this week, and our group may do it next week.”

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