Biglaw, Layoffs

Nationwide Layoff Watch: O'Melveny Fires 90 Lawyers, 110 Staff

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First Latham, then Orrick, now O’Melveny.

Yesterday, we mentioned that layoffs could be coming to O’Melveny & Myers. Today, the rains came.

A firm-wide email just went out announcing that 200 people would be let go. The cuts amount to about ten percent of attorneys and ten percent of staff:

It is against this backdrop that I am writing to inform you about some very difficult and unprecedented decisions we have made affecting lawyers and staff. We will be reducing approximately 90 legal and 110 staff positions from our Firm. The majority of the positions are in the US, with some in Asia and a smaller number in London. Altogether the reduction will impact roughly 10% of our lawyer workforce and roughly 10% of our staff workforce.

Is ten percent the magic number that firms are now trying to get rid of?

As we understand it, O’Melveny will be giving a three-month severance package. Latham wins the severance wars again. On the other hand, Latham laid off 440 people, which is just a little less than O’Melveny and Orrick combined.

While many of the O’Melveny people do not yet know if they will be part of the layoffs, the firm did send a message to all of its incoming summer associates. The future summers were informed of the bad news at the firm and told that summer program would be scaled back to a ten-week experience.

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For those keeping score at home today, we’re looking at 60 people from Shearman & Sterling, 130 people from Dewey, and now 200 people from O’Melveny that are being let go today. Black Wednesday? Humped Day?

UPDATE (12:57): O’Melveny has released some additional news about its severance package to Above the Law. For some people, the package could be better than what is being offered by Latham. A firm spokesperson tells us:

Departing associates and counsel will receive a payment that is equal to 3 months as a minimum and 7 months as a maximum, based upon completed years of service, with two weeks for each full year of service, with no cap on the dollar amount. More importantly, our Firm provided meaningful bonuses in December of 2008, and significant salary increases in January of this year, which was not the case at all firms. We want to be fair and generous with those who remain, as well as those who depart.

These are both good points. As we’ve pointed out in the past, O’Melveny matched the Skadden bonus (except for NYC) for people who billed 1950 hours. And while Latham froze salaries, O’Melveny did not.

We’ll keep you posted. Read the full memo, after the jump.

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O’MELVENY & MYERS — MEMORANDUM — LAYOFFS

Last fall, I sent you a message about our Firm’s performance in the face of an unfolding economic crisis. I indicated that our leadership would be monitoring the economic downturn very closely in order to manage our Firm to weather the storm. Unfortunately the crisis, and its impact on our clients, has become much more severe over the past several months. Almost all businesses today have felt the pressure of this unprecedented economic downturn, and we are not immune. Our Firm remains financially strong; however, we have excess capacity based on current demands and those we anticipate going forward. Most of our clients face an entirely different market today and we are determined to find new ways to meet their needs in a challenging economy. Sound business management has required us to take steps so that we have the agility to meet the current and future expectations of our clients.

It is against this backdrop that I am writing to inform you about some very difficult and unprecedented decisions we have made affecting lawyers and staff. We will be reducing approximately 90 legal and 110 staff positions from our Firm. The majority of the positions are in the US, with some in Asia and a smaller number in London. Altogether the reduction will impact roughly 10% of our lawyer workforce and roughly 10% of our staff workforce.

This was a decision we very much had hoped to avoid. As many of you know, we have taken a variety of measures, including several non-personnel cost reductions, a series of reductions of non-lawyer staff over the past two years, and reduced hiring of new attorneys. Unfortunately, after a thorough review of all options, we concluded further action was needed to adjust our staffing levels to current and future market demands.

The people who are impacted by today’s decision have made meaningful contributions to the Firm and we regret having to take this step. We are working with the affected people, are speaking with them individually, and are providing them with resources to help ease their transition. Over the course of the next several days our partners and senior managers will be holding Town Hall meetings with groups of counsel, associates, and staff to provide them with more information and respond to their questions.

While this is a difficult day for us all, our Firm has all of the right attributes to withstand the current economic decline. We have a highly diverse practice, extremely talented and creative lawyers and staff, and an exceptional group of clients with whom we will continue to work closely to help meet their needs in the face of a tough economy.

A.B. Culvahouse

Earlier: Open Thread: Musings on O’Melveny Layoffs
Associate Bonus Watch: O’Melveny Makes It Rain, Baby (At least outside New York. For 1950+ hours.)
Prior ATL coverage of law firm layoffs

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