Orrick, Herrington & Sutcliffe Announce Layoffs

11/17/08

In an article published by The Recorder, Orrick Chairman Ralph Baxter Jr. said, ''This is the most significant financial crisis in my lifetime. It is something that happened relatively suddenly: It dropped and stayed down, and it produced a need to do this.''

Historically, Orrick has maintained a large structured finance practice as one of its 13 practice areas organized into two divisions. So far, Orrick was able to escape making cuts, while similar firms had already succumbed to layoffs over the last few months.

The Recorder reported that an ''Orrick spokesman wouldn't say how many lawyers or staff were laid off in each office, only that half of the cuts are in the United States, one quarter are in Asia, and the other quarter in Europe. It represents a 5% reduction of non-partner lawyers and a 2% reduction in staff.'' No layoffs are performance based.

Orrick is based in San Francisco, but has 21 offices throughout the world. Those being laid off received the bad news from managers. The rest of the firm learned of the layoffs from an email that included a video from chairman Baxter.

"It was to be expected in part, but to see people you've worked with and developed relationships with have to leave the firm is hard," said an anonymous associate speaking to The Recorder.

Like other firms in the recent past who had recently told associates and staff that profits and practice areas were peachy keen, so too did Orrick. The same associate told The Recorder they were led to believe that other cost-cutting measures would suffice.

San Francisco has a typically strong legal environment, but even so, Orrick has performed better than other firms based her finishing last year with $1.66 million in profits per partner. ''This year, profits per partner will be down because of the economy and capital investments Orrick has made this year,'' Baxter told The Reporter.

The layoffs aren't meant to boost profits this year. In fact, Orrick won't be saving "a nickel" this year from Thursday's cuts because of the cost of the severance packages, according to the Orrick chief.

The San Francisco market has suffered considerably in the financial crisis and economic downturn. Orrick is part of a growing number of firms in the area who are shifting, and often crumbling, in the weak economy. The oft-talked about collapse of Heller Ehrman and dissolution of Thelen are still fresh on everyone’s mind. Recently laid off associates are likely to have a tougher time finding new work as the market is sure to be thick with peers looking for work, as well.