February 27, 2009 8:24 AM
Latham to Cut 190 Associates, 250 Staff
Posted by Richard Lloyd
Latham & Watkins has confirmed to The Am Law Daily that it is laying off 190 associates, or approximately 12 percent of the firm's associate base. The firm also announced cuts of 250 nonlegal staff, including paralegals. The layoffs are the most dramatic cuts announced so far by an Am Law 100 firm.
After mounting speculation, firm chairman Robert Dell this morning confirmed that the firm had little choice given the current economic climate. "It's with profound regret that we're taking this action," he says, adding that the depth of this recession was unprecedented. "The health of the global economy is likely to remain poor this year and so staffing levels have to be better aligned with client needs."
Latham's 550 strong partnership will be unaffected by the cuts, says Dell, explaining that "current and future client demand would likely require less leverage."
The cuts predominantly affect the firm's U.S. offices. New York, the firm's biggest office with over 350 lawyers, and Los Angeles will be particularly impacted. In London, 12 to 15 jobs are under review.
All those affected are being offered severance packages of six months pay, capped at $100,000, and six months medical coverage. Dell describes the package as "quite a bit above the market."
Latham has been one of the banner firms of The Am Law 100 over the past decade, growing aggressively across the U.S. and around the world. The expansion has been fueled, in part, by its finance and private equity practices.
Speculation had been mounting for several weeks that Latham was due to announce cutbacks. On Wednesday, the blog Above the Law reported that cuts were expected this week although the scale of the layoffs is above most predictions.
Dell claims that accusations of stealth layoffs are "just false" and insists that the cuts will not damage the firm's reputation. "People recognize that when you look around you can see clients and other firms going through this sort of decision," he says. Still, the firm's reputation suffered in the years after the last round of significant cuts in the early 1990s, and the firm's management went to pains to avoid such a move, or to acknowledge the possibility of cuts. In an address to associates last March, Dell said the firm had no plans to lay off lawyers.
"The firm had laid off people in the early 1990s (during the last recession) and, in retrospect, we felt that we should have held on to some of those people," Dell now says.
In addition to the layoffs, Latham is deferring the start date for the class of 2009 to mid-December. It also is offering all those in the incoming class the option to further defer start dates to October 2010. The firm will pay those who select this option $75,000; it is encouraging those lawyers to engage in volunteer or community service projects.
The cuts come off the back of a dramatic fall in Latham's profits in 2008. Profits per equity partner dropped 21 percent from $2.27 million to $1.8 million while revenues fell 4 percent from just over $2 billion to $1.9 billion. Dell still is confident about the firm's business, but again stresses that Latham had an "overcapacity issue that we have to deal with."
Make a comment
Following the news of layoffs at Latham & Watkins, we here at The Am Law Daily were wondering how firms are handling job cuts and what associates are doing after firms let them go.
If you were laid off and are interested in possibly being interviewed, e-mail reporter Nate Raymond at [email protected] with your contact information. Your identity will be kept confidential unless you give us permission to reveal your name.