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March 9, 2009 6:52 PM

White & Case Bleeds...and Bleeds

Posted by Vivia Chen

"Everybody is cowering in fear," says one lawyer about his uncertain future at White & Case. Indeed, lawyers at the international behemoth must feel a bit like lambs in the slaughterhouse.

White & Case chairman Hugh Verrier has confirmed to The Am Law Daily the firm's plans to eliminate 200 associate jobs and 200 nonlegal staff positions, and its review of the partnership for potential cuts. No partners have been singled out yet; the annual evaluation process, Verrier says, "is going on right now." The layoffs were announced Monday afternoon in a firmwide e-mail that was first reported on the legal blog Above The Law.

Undoubtedly, it must add to the stress that those destined for the chopping block have yet to be informed. Those affected in the U.S. do not know yet, says Verrier, adding that, "they will know shortly." The "global reduction," as Verrier describes it, entails consulting labor laws of all the countries the firm operates in. Right now, Verrier cannot say where the lion's share of the layoffs will occur.

The news also is bad for those about to join the firm: White & Case will defer the start date of approximately 60 percent of this year's incoming U.S. associate class until 2010. Deferred first-years who pursue volunteer and community service during the deferral period will receive a $75,000 stipend; those who don't will get $45,000, confirms a firm spokesperson. The stipends will cover bar exam costs.

It's a remarkable turn of events for a firm that only three months ago underwent a major reorganization, spurred by a much-touted (and we assume very expensive) McKinsey & Co. analysis. In late 2008, the firm implemented a new structure that shifted power from 35 offices worldwide to 14 regional groups, intended to make White & Case a much more efficient global firm. (Verrier says the firm did not consult with any outsiders about the layoffs. The "decision was made internally," he says. "As much as we'd like to blame McKinsey, we can't.") Moreover, the firm tried to stem losses in 2008 by closing offices in Bangkok, Dresden, and Milan. In November, amid signs of an impending economic decline, it also eliminated 70 associate jobs.

But Verrier says those measures proved inadequate to change the reality of the worsening economy. "We didn't know the depth of the downturn," he says. "We are under the same pressure as everybody else. There was no triggering event; no hemorrhaging in any one region." Moreover, Verrier says he still puts his faith in the global law firm: "There still is a high degree of diversity here; it could turn out that global firms are more insulated from economic downturns." In fact, the firm will open two new offices in 2009, Verrier says--one in the Middle East, and one in Europe. "We go where the work is, and where the clients need us."

Globalization is not the issue, but size, says one White & Case lawyer. "Our size is not sustainable," says this partner, who requested anonymity. "All the global behemoths are exposed." To make matters worse, the partner says, "cost has gone up, and no one is leaving. The firm should be 60 to 70 percent of its size to be where the economy is now." The bleeding, he adds, has only just started.

Download White & Case Statement

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It has taken law firms about one year to figure out what really happened on Wall Street when Bear Stearns went under.

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