Posted Jun 24, 2013 03:32 pm CDT
Lawyers and support staffers at Weil, Gotshal & Manges got a first-hand lesson about “the new normal” on Monday, delivered in an email from executive partner and chairman Barry Wolf.
The law firm will lay off about 60 associates and 110 support staffers, and will cut the pay of about 30 partners. Wolf said the changes are needed so the firm can “continue to excel and retain its historic profitability in the new normal.” The New York Times DealBook blog, the Wall Street Journal Law Blog and Bloomberg have stories.
Some of the partner pay cuts will amount to hundreds of thousands of dollars, the Times says.
The firm had been able to avoid layoffs after the economic downturn in large part because of its bankruptcy practice, the Times says. But things are changing, Wolf said in the email. “As the restructuring and litigation work relating to the 2008 financial crisis winds down, and as the overall market for transaction activity remains at the lower levels which we believe is the new normal, we must now make the adjustments,” he said.
Wolf said the changes are being made from “a position of strength” and it has “zero debt outstanding.”
Dan DiPietro, chairman of the law firm group at Citi Private Bank, told the Times that Weil’s move could set off a chain reaction. He has said that the nation’s largest law firms have too many lawyers, and the excess capacity could amount to as much as 10 percent of the lawyer population.
“My guess is that a good number of firms have been thinking about right-sizing and waiting for someone to provide them cover and we’ll see more of these moves,” DiPietro told the Times. “As difficult as layoffs are, it seems that they will be necessary for some firms to get in synch with the current market dynamics.”