Layoffs, McKee Nelson

McKee Nelson Lays Off 32 (17 Attorneys, 15 Staff)

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Today’s firm-wide meeting at McKee Nelson did not yield good news. A statement from the firm reveals the extent of the bloodletting:

This morning, McKee Nelson LLP laid off 17 of its corporate/finance associates, reducing this practice from 94 to 77 attorneys. The layoffs are concentrated in the MBS, ABS and CDO parts of our capital markets practice.

Our firm also laid off 15 administrative staff. All of the affected attorneys and staff members are in good standing at the firm. None of these layoffs are performance based.

At least the firm was honest about the reason for the layoffs. No stealth layoff / performance review rhetoric from the firm partners:

For the past 16 months, the partners of this firm have been committed to bearing the costs of the overcapacity in our structured finance group in order to keep our team intact. The devastation that befell the credit markets in September, however, was unprecedented. We have analyzed and created a projection of what we believe the structured finance business will look like over the next two years and what resources, capabilities and experience will be required to do that work. This layoff is a necessary part of the firm’s adjustment to this new reality.

More details after the jump.


A tipster reports some additional information:

[William Nelson] said the firm has absolutely no debt and a $50 million credit line, and he said we are working on starting new practice groups and growing.

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Apparently there was just not enough work to support the ABS and CDO practices.

McKee Nelson insists that their financial position is still strong.

Update (2:30 PM): Word on the street is that the affected lawyers are being paid through the end of February (i.e., almost four months) — a generous severance package. They will have access to work email and voice-mail until the end of the year, but they have to collect their belongings from the office — and stop reporting to work — by November 10.

Update / Correction (3:15 PM): This is the official statement from the firm regarding severance. What we reported previously was correct except as to the last day in the office:

Severance package is as follows: Pay and health/dental benefits until the end of February, career counseling, email and voice mail through year end, and departure date by November 14.

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The full McKee Nelson press release appears below.

McKEE NELSON — PRESS RELEASE — LAYOFFS

This morning, McKee Nelson LLP laid off 17 of its corporate/finance associates, reducing this practice from 94 to 77 attorneys. The layoffs are concentrated in the MBS, ABS and CDO parts of our capital markets practice.

Our firm also laid off 15 administrative staff. All of the affected attorneys and staff members are in good standing at the firm. None of these layoffs are performance based.

This decision was not made easily, and we are saddened that this layoff is necessary. For the past 16 months, the partners of this firm have been committed to bearing the costs of the overcapacity in our structured finance group in order to keep our team intact. The devastation that befell the credit markets in September, however, was unprecedented. We have analyzed and created a projection of what we believe the structured finance business will look like over the next two years and what resources, capabilities and experience will be required to do that work. This layoff is a necessary part of the firm’s adjustment to this new reality.

McKee Nelson remains financially sound. Our litigation/enforcement and tax practices are thriving and are experiencing strong demand. Our structured products practice, which includes equity and muni derivatives, as well as state and local government finance, is also doing well. These three areas comprise 65 percent of our firm’s lawyers. The firm is debt-free and well-capitalized, with a strong balance sheet. Our real estate fixed expense is far below 10 percent of revenue, which is considered a measure of financial health.

Even after this reduction, McKee Nelson will continue to have one of the largest, most robust and experienced capital markets practices in the country. We are committed to participating actively and constructively in the vital project of reforming and reestablishing healthy, transparent and reliable capital markets.

On behalf of the entire partnership of McKee Nelson, we wish our colleagues well. We are proud to have been associated with them.

— William F. Nelson, Esq. and Reed D. Auerbach, Esq.

Co-Chief Executive Officers

McKee Nelson LLP

New York, NY/Washington DC

Earlier: Mystery Meeting at McKee Nelson

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