Nothing says economic recovery like one of the most profitable and prestigious law firms in the nation announcing mass layoffs for the first time in 82 years. Yep, four years after the so-called “recovery” began, things are so good that Weil, Gotshal & Manges has decided to cut 7% of its associates and slash annual compensation for 10% of its partners by hundreds of thousands of dollars. As the article below notes, there is still massive overcapacity in the legal profession and this announcement is likely to spark a wave of layoffs in the industry. Not to worry though, Blackstone will continue to place all cash bids on empty homes in Nevada and Arizona. From the New York Times’ Dealbook:
One of the country’s most prestigious and profitable law firms is laying off a large number of lawyers and support staff, as well as reducing the pay of some of its partners, a surprising move that underscores the financial difficulties facing the legal profession.
Sixty junior lawyers, known in law firms as associates, will lose their jobs. That amounts to roughly 7 percent of Weil’s associates. Roughly 30 of the firm’s 300 partners are having their annual compensation reduced, in many cases by hundreds of thousands of dollars. And 110 staff employees – roughly half of them legal secretaries – are being let go.
Dan DiPietro, chairman of the law firm group at Citi Private Bank, said that there were too many lawyers at the country’s largest firms, estimating the excess capacity at as much as 10 percent of the lawyer population. He believes that the profession could possibly experience a wave of job cuts.
“Our market share has been improving, but the market has been shrinking,” Mr. Wolf said.
“We believe that this not just a cycle but that the supply-demand balance is out of whack across the industry,” he said. “If we thought this was a cycle and our business was going to pick up meaningfully next year, we would not be doing this.”
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