In-House Counsel Layoff Watch: Wells Fargo Could Be Making Cuts
An underreported aspect to all of the mass layoffs affecting the legal industry is the plight of in-house counsel. The day after Lehman folded, we wondered if the collapse meant the closing of a popular Biglaw exit option.
We all know that banks and other financial services institutions are laying off tons of employees. In-house attorneys are far from immune to these reductions.
But in-house lawyers also get laid off when banks merge and two legal departments have to be downsized into one. It happened when JPMorgan Chase acquired Bear Stearns. It happened when Bank of America swallowed Merrill Lynch.
And it looks like lawyer layoffs will be a negative externality of Wells Fargo’s merger with Wachovia. A tipster reports:
[Wells Fargo] is moving forward with a 15-20% across the board layoff in the law department (the new combined law department; WF and Wachovia). Layoffs will start as early as next week through June 1st…. Internal meetings with all employees in the department have already taken place.
After the jump, a Wells Fargo spokesperson responds to these reports.
Above the Law contacted Wells Fargo and obtained this statement:
Wells Fargo is going to do everything we can to reduce job losses related to the merger and restructuring and help displaced team members find new opportunities in the combined company. However, in these economic times our turnover rate is unusually low meaning fewer job become available inside the company, which means job losses will happen. Employment numbers will fluctuate over the merger integration period, but ultimately Wells Fargo will continue to be an important employer and community partner throughout the U.S.We do not disclose the total number of positions being eliminated, but I can tell you that although it’s a small percentage of the Law Department, each and every team member is important to our company and we are providing them transition support and helping them find other jobs within Wells Fargo or the community.
Everybody is trying to find a way to force attrition. At least Wells is being more honest about it than some of the law firms we’ve covered.
Wells Fargo is of course one of the banks that is doing relatively well despite the downturn. The company just posted record Q1 earnings of $3 billion. If Wells is firing attorneys, how do you think things are looking for Citigroup’s in-house lawyers?
In-house lawyers, Above the Law is here for you too. We know that the view from the inside isn’t a whole lot brighter than the view from the law firms you’ve left behind.
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el firsto?
Ha! el firsto indeed!
You must not have anything to do el firsto.
Many decades ago, a law clerk asked me what the difference was between an in-house counsel and an attorney that worked for a peer firm. Simply put, an in-house counsel is similar to a housecat that has been declawed and neutered. When released into the real world, the housecat will be eaten alive by big rodents. Normally I would advise the recently terminated in-house attorneys to hang a shingle, however, I am afraid they would be too afraid to do so.
Oh boo hoo! The lawyers that enabled the mortgage fraudsters at Well Fargo, which got a sweetheart deal for Wachovia now has to shed some of these criminals is nothing to be upset about.
I don't think "negative externality" means what you think it means, big boy.
Wells Fargo is a bank, not a law firm, stupid.
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Wells Fargo is an exception in firing in-house attorneys in such large numbers. In stead, most companies are firing their outside law firms and putting more work on the in house staff. In house positions have become substantially more secure than law firm positions.
Lawyer layoffs are, of course, a positive externality for society. We are not a party to the deal, but we are benefited by the fact that fewer people can do this legal work, which is a transaction cost. The newly laid off people can do something productive which leads to an increase in GDP and a wealthier society. Learn economics, or don't use its buzz words.
Could you be anymore clueless with regards to business. When a merger of companies occur the acquiring company looks at places where work over laps. the first place most companies go to is their law departments of the acqired company b/c they generally have enough staff to cover the issues.
WFC's profit is purely bean counting b/c of 1) FASB rule revisions where a company can pretty say what every they want is on their books; 2) they stopped all residential foreclosures thus didn't need to book those losses which will eventually occur.
Wells Fargo started out as a law firm, stupid.
It's too bad they didn't also lay off those former Strong Fund money managers and their high fee/perpetually underperforming funds.
6 is right. "Negative externality" is an economic term of art, and it makes no other sense. It is not synonomous with "consequence" or "by-product" or "result," any of which less fancy terms would have filled the bill. It is, by contrast, a negative externality for my firm to send me off to Iowa for doc review without full compensation for my meals :-(
--Digging Out the Dictionary in Des Moines
Unfortunately, Partner E, we in-house lawyers generally get to hire and fire outside counsel at any time with or without a reason. And you outside counsel, by and large, no longer have the chance to build strong relationships with the business people because we're the ones working with them daily.
Consider us to be the big dog, not the big rodent.
5 - You simple-minded nimrod, Wells was not one of the mortgage whores (Wachovia was). Wells basically had to take Wach, much like Citi was cornered by the Fed into taking ML. And in return for doing the dirty work of the Fed, their stocks took beatings as did their financials.
Does this mean that the people left will finally be competent enough to follow the instructions on the deposition subpoena I send them?
Because the previous fucktards were incapable of following said instructions.
11 - You really should have gone to at least one business and or finance class before letting your mouth outrun the facts.
@16 -- I am not gay, you f'ing asshole, I am Swiss.
This comment is addressed to post no. 15.
Many in-house attorneys that I have met lead nice little simple lives. They shop at discount outlets for clothes and drive Volvos or low end luxury cars. I wouldn't call that the life of a big dog. The simple truth is most in-house attorneys could not handle the demands of working at a peer firm. The ones that worked at peer firms, burned out easily and escaped to the havens of in-house counseldom. A low six figure salary and some stock options. Very pitiful indeed. You better pray that you don't fall victim to the economic tsunami as I see very limited future employment opportunities for you. As a tip, you better dip yourself in sour mustard so that the big rodents won't eat you first.
12 - Stupid is as stupid spouts off:
In 1852 Henry Wells and William Fargo founded Wells, Fargo & Co. to serve the West. The new company offered banking (buying gold, and selling paper bank drafts as good as gold) - and express (rapid delivery of the gold and anything else valuable).
woo hoo! #9 you are totally spot on.
I can do the same job a junior associate at OC would do, for less money, and less stress for myself... no billable hours, no kow-towing to clients (I AM the client), no dealing with brainless former poly-sci and communications majors crying about how they "deserve" $160K+ because... well... just because their parents were proud of them for making that much, I guess.
Wells Fargo is made out of people. PEOPLE!
::singing:: Oh well the Wells Fargo layoff wagon's... comin down the street... oh please don't let it come for me...
N. Wacker Stud
Is is possible to go from In house back to big law?
This answer is addressed to teh question posed in post no. 26.
No! Ask yourself, is it possible for a career crippled former major league pitcher in his 40s to be called up from the minor leagues?
Stop calling my wife "a big house!"
@24: Post of the year, maybe the decade. First reference to "The Music Man" I've seen on a blog, ever.
20 - I love your misguided sense of self-importance.
27 - Such obvious self-gratification of your ego is astonishing. If only you were as important as you think everyone else is supposed to think you are.
16 - you are the simple minded nimrod. Some of the legal counsel at Well Fargo were part of the criminal band from the ex-Wachovia, so their firing is completely justified. Further, just because Well Fargo was healthy enough to purchase the more criminally negligent Wachovia, does not vitiate its own complicity in this financial collapse.
5
The ship be sinking...
If any bankers were made any "promises" about future at-will employment by any of these so called banks, they should contact me.
A neighbor worked many years in house at leading money center bank. He is now a big swinging dick at a branch office of a well regarded international firm. Yes it is possible to go from in house to a firm.
partner emeritus is aalmost as annoying as T-10 1L. PE, give it a rest already. Your schtick is tired, old, annoying and utterly useless.
Elie, you should read your sister blog. http://dealbreaker.com/2009/04/dry-wells.php
Partner Emeritus' posts are getting much better.
Inhouse counsel never gets to fire the outside law firm for any reason, much less no reason. They can take their complaint to the board but that's it.
When you have a bet the firm issue you pay for top counsel, which is not your inhouse counsel. They will simply provide what that lawfirm needs,
and of course it will hurt their egos!
funny.
Dear #22,
You clearly do not work in-house. Yes the hours are nice, or at least nicer than BigLaw. It is not that I am less stressed; it is that I don't get paid overtime or a bonus for hours and thus have no motivation to stay here past 5.
But if you think there is no kow-towing to clients, you are mistaken. Everyone else here is a client. I get looked down upon by the "real business people" every hour. My calls go perpetually unreturned. I live at the whim and pull of sales managers and department heads who see me as nothing more than a potential wrench in the gears.
Here, creativity is a four-letter word. The wheel has already been invented, and my job is to stamp it onto everything. Outside Counsel can worry about "new directions" and "aggressive strategies." My job is to push the required papers around as efficiently and unobtrusively as possible. I have a form-everything and a checklist for every task. I yearn for the days of document review.
I hate him, but Partner Emeritus is right. On the other hand, I get to go home in 20 minutes, and before I do I get to send out a long convoluted email request to Outside Counsel that will surely be fed down to a 1st year who will get stuck working on it until 10pm tonight. So I have claws after all.
partner emeritas is actually a spam bot written by an out of work scotsman
18,
You are clueless and you are missing your torts class. Here are the facts:
Mark to Market changed on April 2, 2009. You don't think WFC had their quarterly statements prepared in two manners to account for the MTM rules being loosened. Wells Fargo release earnings on 4/9/09
Wells Fargo's Moratorium (i.e. you won't book the loss on a foreclosure when a foreclosure doesn't occur): March, 13, 2009.
http://www.bizjournals.com/denver/othercities/dayton/stories/2009/02/16/daily44.html
Or you could look at this fact that WFC might need an additional 50 billion in capital to offset potential future losses from losses on residential mortgages.
http://bloomberg.com/apps/news?pid=20601087&sid=aNsEBgrV8HA0&refer=home
I was a summer associate at Wells Fargo's Milwaukee office last year. It was awesome; we went to like 6 Brewers games at Miller Park, ate tons of cheese, etc. This is a good firm and it has not been pushing back start dates.
39 - how many bet the firm issues do you think the average company has in a year? Yes, maybe once in a blue moon the board takes an interest in who the company retains as outside counsel. But do you really think they give a rats ass about who handles day to day securities work, for example? Maybe general counsels used to be traffic cops, but not anymore. Just accept the fact many in-house counsel are just as qualified and competent as the average big-firm lawyer. They just don't want to deal with the ridiculous personalities that inhabit the halls of biglaw on a day-to-day basis.
44 got it right - my GC hires and fires outside counsel at his own discretion. He doesn't need to ask anyone's permission. The board cares very little about who our outside counsel is.
44 got it right - my GC hires and fires outside counsel at his own discretion. He doesn't need to ask anyone's permission. The board cares very little about who our outside counsel is.
39 is wrong. 44 is right.
#40
I do work in-house, and while I have experienced some of the problems you refer to: people not returning calls ("ugh, legal again?"), people acting self-important because they are in sales, etc. it's not really that bad, and nothing I can't handle.
I have plenty of motivation to work harder, and stay late or on the weekend if need be; it gets noticed, and I don't get laid off. In good times, I get a bonus.
Maybe you're just too much of a whiner to appreciate it? I mean, unless your last name is Rockefeller (or the like) you're a worker bee in this country. You really believe there are jobs out there where everything will be roses, and you will be treated like royalty? It's time to get real.
There will be a few instances where the CEO or Board will insist on certain "name" firms, but there are at least 15 or 20 litigation firms that would usually be acceptable and about 10 M&A firms that would be acceptable.
Unless there is a personal relationship or some sort of "status" issue, most CEOs or Boards won't interfere with a GC's choice of outside counsel for most matters. In fact, many CEOs and CFOs are now probably demanding that GCs use lower cost firms where possible.
Microsoft's legal department is laying off 5% of their employees by the end of June. (That's about 50 people, lawyers and staff).
One addtional factor for in-house lawyers is that they typically don't have to be admitted in the state in which they live. A layoff can frequently mean a need to move back to their licensing state or take another bar exam if they can't find another in house position in the same city.
Partner E = douche. There's more than one way to be a good lawyer. Law firms don't have a monopoly on that. Geez.
Wachovia was not a mortgage whore, you moron. They acquired Golden West in 2006, which ulitmately cost them dearly. Wachovia was a very conservative bank, but made a poor, poor acquisition. So it goes.
good lord, have we really stooped to the level of insulting the jobs of fellow counsel.
Look, lawyers at firms have one duty, bill as much as possible. Depending on the client needs, the perceived "sophistication" of the firm, and what the situation would require, they bill.
In house counsel have one job. Handle internal legal matters on day to day issues and when anything hard comes in, get external counsel. This is generally because of man-power issues, but also conflict of interest issues and just being able to put the onus on someone else so just in case they lose a case or whatever, its not skin off their back.
But internal counsel ALSO spends lot of time effectively being beancounters. Spin it how you want. When a sizeable portion of your job is dealing with bills, your jobs substance is limited.
Being bitter about it or talking about your job security doesnt change that fact.
But both are really important and, well, both sides are intertwined anyway. No point in fighting.
What happened to all the vitriol towards ibankers? Their lousy decision making caused this issue.
53: I started out at a firm, went inhouse for a few years and have been back at a firm for several years. I can tell you that reviewing bills for work firms did for me occupied a very small proportion of my time when I was inhouse. I spend considerably more time on billing now than I ever did as an inhouse lawyer.
53: I started out at a firm, went inhouse for a few years and have been back at a firm for several years. I can tell you that reviewing bills for work firms did for me occupied a very small proportion of my time when I was inhouse. I spend considerably more time on billing now than I ever did as an inhouse lawyer.
How about some facts regarding the Wells Fargo lay-offs? What departments got hit? SF? LA?
Just the ones on the San Diego/San Antonio line got shot off.
This is for 29 and his penchant for musicals...
Out there
There's a world outside of BigLaw
Way out there beyond this hick town, Partner E
There's a slick town, Partner E
Out there
Full of shine and full of sparkle
Close your eyes and see it glisten, Partner E
Listen, Partner E...
Put on your Sunday clothes,
There's lots of world out there
Get out the brillantine and dime cigars
We're gonna find adventure in the evening air
Girls in white in a perfumed night
Where the lights are bright as the stars!
Put on your Sunday clothes, we're gonna ride through town
In one of those new horsedrawn open cars
We'll see the shows at Delmonicos
And we'll close the town in a whirl
And we won't come until we've kissed a girl!
Worst of the worst Lehman lawyers - at Lehman Holdings working on the unwind with Weil Gotshal and Alvarez & Marsal. The second worst, still at Barclays. Good (honest) guys pushed out months ago.
anus>?>?