In one of the largest rounds of layoffs to date, the firm said that 12% of its non-partner lawyers would be cut. Twenty-five lawyers will be given the chop in Asia – the same amount as in Europe – while 50 will leave in the US. The firm also announced that 200 staffers would be let go.Last November, 40 associates and of counsel in Orrick’s structured finance and real estate practices were booted to the curb. It also decided that 35 staffers were surplus to requirements. Those 75 staff were offered fivemonth severance packages, but the people laid off this time around only receive a three-month package. By contrast, Latham & Watkins offered its associates a six-month severance package capped at US$100,000.
Firms need to be aware of the impact that multiple rounds of layoffs have on staff morale. Law firm consultant Wendy Tice- Wallner said that firms considering layoffs may need to make them all in one fell swoop so as to not erode staff morale.
“Our analyses and commitments to markets are based on long-term practice and client drivers”Christopher Stephens, Orrick
“Most firms would prefer to do one round of layoffs. The ideal situation is to not be doing this very often and to know where you want to be six months or a year from now. You don’t want people waiting for the other shoe to drop,” she said. “It’s not just a slow practice area or underperformers. These cuts are really targeted at keeping the bottom line from becoming intolerable to the owners of the business. When you are talking about this large a volume of people, you are inevitably cutting into people who could be keepers. You can’t help but cut some potentially quality lawyers.”
Meanwhile, the firm has also shelved plans to launch in the Gulf region. The firm announced last year that it would open two offices in the region in 2009, but these plans are now on hold in light of global economic conditions.
“We are not short-term speculators, and our analyses and commitments to markets are based on long-term practice and client drivers,” said Christopher Stephens, Orrick’s Asia managing partner. “But current economic realities are causing us to reorient several of our traditional operations, and our primary focus now is aimed at achieving better practice efficiency and value for clients.”
Stephens added that despite the downturn the firm will still be active in examining potential markets around the world. “The Middle East is an important commercial region and [is] becoming an increasingly important financial centre – global circumstances notwithstanding,” he said.