The Wall Street Journal-20080111-Law Firm Cadwalader To Lay Off 35 Attorneys
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Law Firm Cadwalader To Lay Off 35 Attorneys
One of the nation's most profitable law firms announced it was laying off just under 5% of its staff due to a slowdown in some practice areas -- including those hurt by the credit crunch.
Cadwalader, Wickersham & Taft LLP, a 750-lawyer New York-based firm, said it will lay off 35 attorneys because of a decline in business in its finance and capital-markets practices.
The firm has had a large structured-finance practice, including configuring collateralized-debt obligations, which has been particularly impacted by the recent downturn, according to the firm.
"We were very careful about this, and we waited to see if there were any signs of the economy turning around" before letting lawyers go, says Cadwalader partner Gregory Markel, chairman of the firm's litigation department. "We didn't see any evidence of this turning around."
Other Firms to Follow?
Cadwalader is one of the most prominent law firms to recently announce layoffs, which could trigger a chain reaction among other firms; capital markets and real-estate practices are down at many firms.
"I think a lot of firms have been waiting for one of the big boys to shed associates so they can have cover to do the same," says Arthur Schwartz, a recruiter at New York's Klein Landau Romm & Schwartz Inc.
Two firms that had large practices in the area of structured finance, Thacher, Proffitt & Wood LLP and McKee Nelson LLP, have offered buyouts to lawyers.
It is still relatively rare for large law firms to engage in mass staff reductions. For one, many large law firms boast specialties, such as litigation and bankruptcy, that typically pick up during down economies.
These practices can often absorb corporate lawyers and others, whose practices are negatively impacted by a market downturn.
But firms increasingly recognize that they can take a hit to profits and morale when they attempt to shuffle lawyers into new practices, says Paula Alvary, a principal of the Boston-based legal consultancy Hoffman Alvary & Co.
"Firms are more reluctant to carry people during down times," she says, "and not every associate wants to be carried by doing work they are not excited to do."
Cadwalader relocated 20 to 25 lawyers into some of its more robust practices, but you can't move "70 people overnight," Mr. Markel says. "We used our best judgment about what was the right number to move."
He added: "We did this in the most open and humane way possible."
