O’Melveny & Myers has reduced its staff and associate headcount amid cost cutting measures that were announced this week, according to the firm and other sources.

According to the legal blog Above the Law, O’Melveny also has laid off five associates in its Los Angeles office.

The moves come as O’Melveny’s profits per partner have remained at about $1.6 million, on average, during 2006 and 2007, mostly due to a drop in large private equity deals, and as many other firms, including Katten Muchin Rosenman, Sonnenschein Nath & Rosenthal and Clifford Chance, have laid off associates and staff in recent weeks.

On Monday, O’Melveny Chairman Arthur B. Culvahouse Jr. left a voicemail message to many of the firm’s lawyers informing them of “cost cutting measures,” according to a former partner, who agreed to speak on condition of anonymity.

In a prepared statement, Sonja Steptoe, a firm spokeswoman, said: “There have been no economic layoffs of associates at O’Melveny & Myers and there are no plans to conduct such layoffs. We are in the midst of our annual associate evaluation process, which began as scheduled in September and some associates, as is always the case, are receiving less-than-satisfactory performance reviews. It would be inaccurate to infer a layoff from performance reviews given to less than 1% of our associates and counsel headcount. Our lawyer headcount has not declined year over year. We simply are choosing to pay and to promote the large majority of associates who are working very hard and at high levels.”

“With respect to staff,” she continued, “we have prudently been reviewing and reducing our cost structure for the past eight months, following two years in which our expenses have grown faster than our income. During this period we have reduced operating expenses, including staff, to reflect technology-driven efficiencies, to bring staff ratios into alignment with competitive norms and to address redundancies that are not required to support the modern practice of law.”

In 2006 alone, the firm lost about a dozen partners who specialize in private equity deals, restructuring and other transactional work, including the former chairman of O’Sullivan, a New York private equity boutique that O’Melveny acquired nearly seven years ago.

Last year, three partners who specialize in private equity, joint ventures and cross-border mergers at O’Melveny’s Tokyo office left for Morrison & Foerster. Also last year, Raymond Wong, a capital markets partner at O’Melveny’s London office, left for Paul, Hastings, Janofsky & Walker.

This month, two finance lawyers at O’Melveny left for Bingham McCutchen’s Tokyo office, and John “Jack” Hardy Jr., the former co-chairman of O’Melveny’s capital markets practice, joined Washington-based Venable’s Los Angeles office. Also, three partners from O’Melveny who specialize in transactional work, joined the San Francisco office of New York’s Shearman & Sterling.

Earlier this year, O’Melveny offered partners who were 50 years and older an early retirement package.