Law Giant Latham & Watkins Lays Off 440

Like banks, law firms are teetering more than they like to let on. The economic hammering became a lot more visible today when industry giant Latham & Watkins announced it was jettisoning 190 lawyers and 250 support staff members.

"The depth and duration of this recession is unprecedented," Robert M. Dell, the firm's chairman, said in announcing the cuts of 12 percent of the firm's legal associates and 10 percent of its paralegals and other staff.

The move sent shudders through the legal community as lawyers -- already in a crouch as corporations look for ways to trim or even slash their legal bills -- are bracing for cuts in bonuses, salaries, and even jobs.

Legal blogs are rife with guessing that other big names, including Kirkland & Ellis, another legal powerhouse, will make a move toward cutting its ranks. The Chicago-based firm, one of the Top 100 in size, already let go some two dozen non-equity partners, according to AboveTheLaw.com, which is speculating about further layoffs.

The country's economic meltdown already claimed two major San Francisco law firms, Thelen and Heller Ehrman, as victims. Thelen was 84 years old and Heller was 118 when they closed their doors late last year, throwing hundreds of lawyers out of work.

Latham, so large that it kicks off trends in the legal industry, in December decided to freeze legal associate salaries for this year at the 2008 level. About two dozen other large law firms around the country have adopted the same policy since then.

That followed the firm's dip in revenues last year, to $1.9 billion from more than $2 billion. Dell, in today's announcement, signaled that he's not expecting the economy to improve before the end of 2009, so the firm had to "adjust our staffing levels" to align with the needs of clients.

However, none of its 550 partners were shown the door. The cuts are largely in its New York and Los Angeles offices.

However, Latham is offering generous severance packages -- including payment of six months salary (up to $100,000) and six months of continued medical benefits and "other resources" -- that nervous law associates elsewhere can only hope will set the industry standard.

But all indications are that high-end law is not going to be the gold-plated career of the past. Latham also today told its incoming lawyers that it is offering them $62,000 for deferring their starting date until October 2010 -- a point well after Dell said he thinks the recession will end.

by Elizabeth Olson