The large law-firm world normally is fairly impervious to the economic roller-coaster.
Like Jerry Seinfeld, they typically are broad-based enough to be “even-steven.” If corporate work sours because of a downbeat business climate, then, hey, bankruptcy, foreclosures and litigation overall soars. Angry, dissatisfied, and desperate people sue.
But once in a while, a law firm’s foundation begins to crack. That’s what’s going on at Cadwalader, Wickersham & Taft. The New York firm Wednesday announced close to 100 layoffs, including lawyers ranging from senior partners to lowly associates. Most of the layoffs were in areas battered by the mortgage financing crisis.
The firm already laid-off 35 associates last January. The firm, with about 630 lawyers, is in an uncomfortable spot given the wave of consolidation that has struck the legal industry. Firms with global ambitions today seek to have sweeping practices that employ more than 1,000 lawyers worldwide. Other firms, without those ambitions, try to stay under 400 or 500 lawyers and concentrate on key, prosperous practice areas.
W. Christoper White, the firm’s chairman, told the legal magazine The American Lawyer:
“If it had been, as we anticipated in the early part of the year, a less severe contraction and not as prolonged a contraction, we would have ridden this out,” White says. “But it seems clear from the advice clients are giving us that this will be more severe and longer than we anticipated.”
Of the 96 affected lawyers, White says 90 percent “are being laid off because of the downturn in the real estate finance and securitization market.” The job reductions principally affect Cadwalader’s New York, Charlotte, and London offices (the majority are in New York); one or two Washington, D.C., lawyers also face cuts, White says. Most are associates, though some special counsel are affected.
Interestingly, the firm says it will still bring in 70 entry-level associates this fall for its first-year class. But they are (relatively) cheap labor who can do the dirty work at rates that please large corporate clients. (If you can call a starting salary in the mid-$100,000s “cheap.”)
The American Lawyer also says the victims of the lay off may have trouble finding work that will compensate them, well, the manner to which they have become accustomed:
It’s a tough market,” says Margie Grossberg, a New York-based legal recruiter at Major, Lindsey & Africa. “People will land on their feet, but it is going to take a bit of time, and people may be forced to reinvent themselves.”
The home for kvetching by the high-flying associate class is the blog Above the Law. Here, you can read some scathing critiques of the firm’s management, get more information, or indulge in a feeling of schadenfreude.
Cadwalader, ATL says, notified some lawyers by leaving envelopes on the seats of their chairs. What’s the takeaway from this, associates? Never, ever, leave your office.
As a journalist–and especially as a Tribune Company-employed journalist–I’m not going to dance on anyone’s grave, even if I seethe with class resentment. (Just kidding.) Few industries seem to be holding their own in an ever-widening global downturn. (But hey, the Commerce Department said today that the economy grew almost 2 percent last quarter. Party hats, everyone!)
And I always thought, hey, if this writing gig didn’t work out, I could always go back to being a lawyer. But now–maybe not. There’s always clown college.