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.