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Orrick Leader Defends Associate Layoffs after Hiring 27 Heller Partners

Posted Nov 14, 2008 7:01 AM CDT
By Debra Cassens Weiss

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The chairman of Orrick, Herrington & Sutcliffe says you really can’t compare the firm’s decision to fire 40 associates yesterday with its decision just a month ago to hire 27 partners from the dissolving Heller Ehrman.

It’s like comparing apples and oranges, chairman Ralph Baxter told the Am Law Daily. The hirings and the layoffs provide “a focused picture of Orrick. We're bullish about the future, bullish about the role of lawyers in global finance, and we are boldly taking action to diversify Orrick's practice. All of the Heller lawyers who joined us were in practice areas that are litigation-oriented. Compared with the layoffs, it's apples and oranges. They are mostly partners, and they bring business with them.”

Orrick hired 27 Heller partners and one senior counsel in the United States, including 13 who focus on antitrust, five insurance recovery practitioners and four intellectual property lawyers. Orrick also hired the core of Heller’s corporate legal team in the United Kingdom after several other law firms rejected the idea.

The 40 associates who were laid off were in the firm's real estate, structured finance and corporate practices. The firm also cut 35 staffers.

Orrick will pay the ousted lawyers and staffers five months of severance pay and subsidize their insurance coverage. Baxter told Law Blog yesterday that the layoffs were a last resort. He elaborated about the firm’s cost-cutting measures in the interview with the Am Law Daily.

The firm cut all nonessential travel and postponed biannual meetings for each practice group, he said. It also stopped all associate hiring and postponed hiring for some staff positions. And it shifted some lawyers to other practice areas. The cost savings were substantial, but not enough to avoid layoffs, he said.

“It all amounted to a lot of money, but when it was all said and done, the numbers told us we still had a problem,” he told the Am Law Daily. “In this economy, no practice area is so robust it's just bursting at the seams.”

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