We received reports this morning that Orrick, Herrington & Sutcliffe was planning to make deep cuts into their structured finance, real estate and corporate departments.
We’ve been able to confirm that Orrick is laying off 40 associates and 35 staff members today. The structured finance and real estate departments are expected to be the hardest hit. Associates were notified by chairman Ralph Baxter via email (which included a video).
Despite Orrick’s refusal to respond to our multiple requests for comment all morning, we can also report that displaced attorneys are getting two weeks notice plus five months severance. That is better than the severance package offered by White & Case on Tuesday.
Orrick was willing to speak with the WSJ Law Blog. The firm told the WSJ that they tried to avoid cutbacks for as long as possible:
Throughout 2008, we have done all we could to avoid today’s action: we have redeployed lawyers to different practices and we have cut expenses. Unfortunately, our staffing levels in the affected practices still remained too high given the economic environment our clients and we face.”
While the firm contends that these moves were taken solely in response to the economic crisis, a tipster tells us that the real reason was “to maintain PPP [profits per partner] of $1.5 million in 2009.”
So sad — and surprising. Orrick, you might remember, was one of the first major firms to raise associate salaries to $160K outside of New York. After Orrick moved, the rest of California followed: Latham, Gibson, OMM, even Thelen (kind of).
Just last month, we reported on how some firms (including Orrick) were using the market downturn as an opportunity to acquire productive lawyers and good clients. Baxter was highlighted in the WSJ article. And two weeks ago, Orrick stood behind its previously announced 2008 bonus structure.
But apparently some people had to go. We understand that the layoffs will affect multiple offices.
Update (2 PM): The firm finally sent over its statement. Check it out after the jump.
ORRICK, HERRINGTON & SUTCLIFFE — PRESS RELEASE — LAYOFFS
Orrick, Herrington & Sutcliffe LLP announced today that it is laying off
approximately 40 associates and counsel in the firm’s Real Estate,
Structured Finance, and Corporate practices. In addition, the firm is
laying off approximately 35 staff.
We believe these actions are necessary to adapt to changes in the world
economy and the demand for certain legal services. These actions are
unrelated to performance and are across the firm’s global regions.
We regret the need to take today’s actions and the impact they will have
on talented lawyers and staff. We will provide generous severance and
outplacement services to help make the individual transitions as smooth
For over a year, the capital markets around the world have experienced
unprecedented challenges. As a result, our clients in the Real Estate,
Structured Finance, and some parts of our Corporate practices have
reduced their transactions, leading to material overstaffing.
Throughout 2008, we have done all we could to avoid today’s action: we
have redeployed lawyers to different practices and we have cut expenses.
Unfortunately, our staffing levels in the affected practices still
remained too high given the economic environment our clients and we
face. The three affected practice areas, however, continue their roles
as important financial and strategic contributors.
We have continued in 2008 our strategy of investing in the future and,
this past year, added lateral partners throughout strategic practices
and locations. We have been able to improve our market position and
geographic and practice scope and depth. These additions have made us
stronger and have helped us minimize the scope of today’s actions.
We take these steps with deep regret, but have concluded that they are
necessary and in the firm’s best long-term interests.