Back in November, we broke the news that, barring a “substantial improvement” in market conditions, the law firm of Thacher Proffitt & Wood would resort to lawyer layoffs in January. The firm is a major player in structured finance and real estate, two practice areas that have been hard hit by the credit crunch.
January is now here — and, in fact, almost over. We were reminded of this last week, when we saw this article in the New York Sun about law firm layoffs, mentioning Thacher Proffitt:
Earlier this month, Manhattan-based Cadwalader Wickersham & Taft laid off 35 lawyers, 26 of them in New York City, and late last year, Thatcher Proffitt & Wood cut 50 associates’ jobs. The cuts have spurred other firms to follow suit, experts said.
Was the statement accurate, insofar as it suggests or implies that TPW laid off fifty (50) associates? We followed up with Thacher, which issued this statement, through a spokesperson:
As described in our November 27, 2007 official statement, we notified 24 associates in the Structured Finance and Real Estate Practice Groups that if there was no substantial improvement in the market, it was near certain that economic layoffs would take effect in January 2008. As of today, 99% of the 24 associates have accepted a package which compensates them through the end of March 2008, and many have already found new positions. To clarify recent media reports, these events occurred ahead of our initial plan to commence layoffs. [Ed. note: Maybe it should be 96% of the 24 associates -- 23/24 = 95.8%. But who knows... maybe one person is still working part-time for TPW?]
In addition, we offered our first-year associates in the Structured Finance and Real Estate Practice Groups a four-month severance package, should they volunteer to leave the firm. Again, referring to our original statement, the first-year associates’ offer remains strictly voluntary; they are under no obligation to accept it. We do feel it’s in their best interest to explore other opportunities, since we are concerned that we will not be able to provide them with the best work experience at this formative stage of their careers. A group of first-year associates has voluntarily accepted this package.
Finally, we would like to acknowledge the goodwill of those in the business and legal communities who have expressed interest in our associates and have helped to place them in new positions. Although these decisions were difficult for our firm, we are confident that our approach kept our associates’ interests in mind and also mitigated our business risks.
We construed this as a statement that the firm did not have to resort to layoffs (as originally planned). We followed up with TPW, and they confirmed this understanding: “Up to this point, departures have been voluntary.” [FN1]
But should TPW associates start dancing in the hallways? Not yet. When we asked if this meant the firm had ruled out layoffs going forward, Thacher was noncommittal: “We cannot speculate on future market conditions and the potential impact on our attorney population.”
So stay tuned. In other TPW news, it’s not just associates who are leaving. Partner V. Gerard (“Jerry”) Comizio, a prominent banking and financial services lawyer here in D.C., just left Thacher to join Paul Hastings (see this press release). When a firm is going through tough times, partner defections are to be expected (although they’re unwelcome news, since rainmaker departures only exacerbate the problem of insufficient business to go around).
[FN1] We realize, of course, that if you “voluntarily” depart after being told you’ll probably be laid off if you stay, it’s not completely “voluntary.” A cynic must suggest that it’s like “voluntarily” giving the mugger your wallet after being told you’ll be shot if you don’t. But, on a hyper-technical level, we wouldn’t consider these departures “true” layoffs. People can always wait for the ax to fall — like the one apparent holdout among the 24 associates.
Fearing Recession, Law Firms Tighten Belts [New York Sun]
Pinup’s Naked Justice: Keeps Lawyer Job [New York Post]
Paul Hastings Bolsters Bank Regulatory Practice with the Addition of V. Gerard Comizio to the Washington, D.C. Office [Paul Hastings (press release)]
Earlier: Nationwide Layoff Watch: Thacher Proffitt Announces Likely Future Layoffs