Earlier today, we reported that Katten was holding a firm wide meeting this afternoon. Predictably, the talks soon turned to layoffs. Here is what some of the people who were at the meeting are telling us:
20% pay cut if average billables were less than 150 last year and less than 145 for the last 3 months. 12 associates laid off (seems VERY low …). Incoming associates deferred until Feb 2010 start date.
The 12 number seems low to other tipsters too. But the meeting isn’t over in all of the firm’s offices yet. And these numbers do not take into account how many (if any) staff were laid off, or income partners.
I say income partners because we have received more reports that some of them were let go as well.
Update (4:38): Katten has released an official statement. 69 people were let go. Like Jenner earlier today, Katten describes the layoffs as “relatively small.” It looks like we have a new “official euphemism,” but in both cases it happens to be true. Read the full statement after the jump.
But we are also getting some very interesting news about the severance package Katten is offering. Details on that after the jump.
We understand that income partners are receiving double the severance as laid off associates. But there is one big catch for both classes of people:
Associates get 1 month, unless they sign a separation agreement, which gives them 3 months. Income partners get 1 month, unless they sign a separation agreement, which gives them 6 months.
We asked the firm for details about the separation agreement, but they have not yet responded to our inquiries.
Still, unless the separation agreement involves finding 100 souls to man the Flying Dutchman in your stead, I think most people will sign the thing. Nobody wants to end up living in Tortuga in a month. (Fun fact: I’ve actually been to the real Tortuga.)
If the firm updates us on what is in the separation agreement, we’ll post it here.
Update (4:38): Read the official Katten response below.
KATTEN — STATEMENT — LAYOFFS
The firm is fortunate to have entered the current economic downturn from a position of strength and it remains on solid financial footing with virtually no long-term debt and unburdened by redundant and costly U.S. and international offices. This places us in the best-possible position to withstand the current downturn, capture additional market share in each of our core practice areas, and remain poised for future growth.
However, like many law firms, we have had to make some very difficult staffing decisions, including today’s layoff of a relatively small number of our attorneys and staff. These reductions included 12 associates, seven non-equity partners, four other attorneys, six
paralegals and 40 staff members.
This layoff was relatively small due to a new Katten program that will creatively reduce costs while preserving dozens of jobs. Under the program, underutilized associates will be placed on a lower compensation scale. This scale reduces an associate’s base salary by 20 percent if he or she did not bill within 200 hours of their billable target in 2008, but offers the chance for them to earn back their total base at the end of this year if they meet their hours going forward. Those who reached this billable hours target in 2008 and worked at a similar pace for the last three months of the fiscal year will continue to receive their full base compensation. This structure, while reducing some associates’ base compensation, will save their jobs, enable us to reduce costs, and maintain our existing practice teams.
We devote significant resources to recruiting talented lawyers and creating teams that provide exceptional client service, and this move allows us to preserve those strong teams. It also means that when economic conditions do improve, we will still have our people in place.
In conjunction with our new compensation program, we are implementing a number of additional measures designed to cut costs, including reducing the length of our summer associate program from 10 weeks to eight weeks and reducing summer associate salaries by 20 percent. We are also delaying the start date for incoming first-year associates until February 1, 2010, the beginning of our fiscal year. These associates will be compensated with an additional stipend.
We are confident that these combined measures will help us reduce our costs without stunting future growth.