Never Forget: Latham laid off hundreds in 2009 Forum

[Anonymous User]

This singling out of Latham needs to end.

dla piper to Lay Off 80 Associates, 100 Staff in U.S. (2009) https://www.law.com/almID/1202428237765/
Nationwide Layoff Watch: Biglaw Firm (dla piper) To Slash Up To 200 Jobs — And Possibly More (2016) https://abovethelaw.com/2016/05/nationw ... ibly-more/

Nationwide Layoff Watch: Kirkland & Ellis Fires Non-Equity Partners (2009) https://abovethelaw.com/2009/01/nationw ... -partners/

Nationwide Layoff Watch: O’Melveny Fires 90 Lawyers, 110 Staff (2009) https://abovethelaw.com/2009/03/nationw ... 110-staff/
Staff Layoff Watch: O’Melveny & Myers Replaces 75 Humans With Technology (2011) https://abovethelaw.com/2011/10/staff-l ... echnology/

Orrick Lays Off 300 (2009) https://www.law.com/therecorder/almID/1202428772307/

Baker & McKenzie Lays Off 38 Lawyers, 86 Staff - Law360 (2009) https://www.law360.com/articles/96114/b ... s-86-staff
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If you worked at Latham and don't like them, then do what the O'Melveny guy did. Start a blog with your grievances and put your name under it (Yes this is real. http://brian-boyle-omelveny-torture-att ... gspot.com/ ). But don't single Latham out for doing something every other firm did.

[Anonymous User]

Bumping this thread not because I care about the Latham vs. all other firms debate, but because I'm growing increasingly concerned about this type of mass layoff in BigLaw happening again in the not too distant future.

From purely anecdotal observations that might not be borne out by actual data, it seems that OCI this year is shaping up to be a bit rougher than in previous years, and I've overheard too many people talking about how a recession is due for my comfort. Some of the murmurs I've heard mention the recent raises as a bad sign in terms of increasing risk of partner departures, especially if the increased overhead cuts into firms' PPP. As a 2L, I have no idea if either the recession talk or the theory of salary raises increasing risk of layoffs has merit. Hopefully, the perception that OCI was rough might mean at least that firms are being conservative in hiring and also want to avoid another Lathaming. But in the meanwhile, can anyone speak as to whether a repeat of 2009 is an actual possibility, or if I'm being entirely paranoid for no good reason? Perhaps more importantly, regardless of whether it's a realistic possibility, what can I do in the meanwhile to best insulate myself from becoming one of the people axed if it ever comes to that? I've tried my best this OCI season to pick a firm that seems to be in good financial health - but beyond that, is there anything I should be doing in particular? Networking? Familiarizing myself with particular partners at my SA firm?

If I'm being a complete nutjob, please feel free to tell me so and shut this down.

If another recession happens (I’m predicting 2020), I think Kirkland associates are the most at risk. Yes, Kirkland has a very large and powerful bankruptcy arm, but its total number of associates has swelled in recent years. I think there are over 1000 associates and like 500 income partners (Kirkland promotes after 6 years so a lot of these partners would still be at risk, too).

I considered working there but I just can’t see the firm sustaining itself if a recession hits.

Can anyone else discuss what they think about Kirkland's position in an eventual downturn? I am considering accepting an offer (secondary market), but I've heard this a few times now and it is definitely a concern.

[nixy]

From purely anecdotal observations that might not be borne out by actual data, it seems that OCI this year is shaping up to be a bit rougher than in previous years,

It’s way too early to say this. It may turn out to be true - I have no idea - but it’s still too early to tell.

[Anonymous User]

Bumping this thread not because I care about the Latham vs. all other firms debate, but because I'm growing increasingly concerned about this type of mass layoff in BigLaw happening again in the not too distant future.

From purely anecdotal observations that might not be borne out by actual data, it seems that OCI this year is shaping up to be a bit rougher than in previous years, and I've overheard too many people talking about how a recession is due for my comfort. Some of the murmurs I've heard mention the recent raises as a bad sign in terms of increasing risk of partner departures, especially if the increased overhead cuts into firms' PPP. As a 2L, I have no idea if either the recession talk or the theory of salary raises increasing risk of layoffs has merit. Hopefully, the perception that OCI was rough might mean at least that firms are being conservative in hiring and also want to avoid another Lathaming. But in the meanwhile, can anyone speak as to whether a repeat of 2009 is an actual possibility, or if I'm being entirely paranoid for no good reason? Perhaps more importantly, regardless of whether it's a realistic possibility, what can I do in the meanwhile to best insulate myself from becoming one of the people axed if it ever comes to that? I've tried my best this OCI season to pick a firm that seems to be in good financial health - but beyond that, is there anything I should be doing in particular? Networking? Familiarizing myself with particular partners at my SA firm?

If I'm being a complete nutjob, please feel free to tell me so and shut this down.

If another recession happens (I’m predicting 2020), I think Kirkland associates are the most at risk. Yes, Kirkland has a very large and powerful bankruptcy arm, but its total number of associates has swelled in recent years. I think there are over 1000 associates and like 500 income partners (Kirkland promotes after 6 years so a lot of these partners would still be at risk, too).

I considered working there but I just can’t see the firm sustaining itself if a recession hits.

Can anyone else discuss what they think about Kirkland's position in an eventual downturn? I am considering accepting an offer (secondary market), but I've heard this a few times now and it is definitely a concern.

Kirkland is hiring like crazy right now - all markets, with huge signing bonuses. If a recession hits (especially if there is a PE bust) there are bound to be major layoffs.

[Anonymous User]

Bumping this thread not because I care about the Latham vs. all other firms debate, but because I'm growing increasingly concerned about this type of mass layoff in BigLaw happening again in the not too distant future.

From purely anecdotal observations that might not be borne out by actual data, it seems that OCI this year is shaping up to be a bit rougher than in previous years, and I've overheard too many people talking about how a recession is due for my comfort. Some of the murmurs I've heard mention the recent raises as a bad sign in terms of increasing risk of partner departures, especially if the increased overhead cuts into firms' PPP. As a 2L, I have no idea if either the recession talk or the theory of salary raises increasing risk of layoffs has merit. Hopefully, the perception that OCI was rough might mean at least that firms are being conservative in hiring and also want to avoid another Lathaming. But in the meanwhile, can anyone speak as to whether a repeat of 2009 is an actual possibility, or if I'm being entirely paranoid for no good reason? Perhaps more importantly, regardless of whether it's a realistic possibility, what can I do in the meanwhile to best insulate myself from becoming one of the people axed if it ever comes to that? I've tried my best this OCI season to pick a firm that seems to be in good financial health - but beyond that, is there anything I should be doing in particular? Networking? Familiarizing myself with particular partners at my SA firm?

If I'm being a complete nutjob, please feel free to tell me so and shut this down.

If another recession happens (I’m predicting 2020), I think Kirkland associates are the most at risk. Yes, Kirkland has a very large and powerful bankruptcy arm, but its total number of associates has swelled in recent years. I think there are over 1000 associates and like 500 income partners (Kirkland promotes after 6 years so a lot of these partners would still be at risk, too).

I considered working there but I just can’t see the firm sustaining itself if a recession hits.

Can anyone else discuss what they think about Kirkland's position in an eventual downturn? I am considering accepting an offer (secondary market), but I've heard this a few times now and it is definitely a concern.

Kirkland is hiring like crazy right now - all markets, with huge signing bonuses. If a recession hits (especially if there is a PE bust) there are bound to be major layoffs.

If a recession hits, Kirkland will not be able to collect the $600-700/hr it seems to charge for junior associates. The same can be said of many firms, but Kirkland utilizes a pyramid model with a ton of associates, and many will become dispensable.

[Schotes]

If a recession hits, Kirkland will not be able to collect the $600-700/hr it seems to charge for junior associates. The same can be said of many firms, but Kirkland utilizes a pyramid model with a ton of associates, and many will become dispensable.

Meh. Kirkland is leveraged about 1:1, which is typical. Kirkland has a large bankruptcy practice. They should be in better shape than average during a downturn. All newer and lower rated attorneys are at risk during a recession regardless of firm.

Firms that can charge top of the market rates for associates have the most desirable clients. That is not a disadvantage in an economic downturn.

When choosing a firm I would me more concerned about biglaw/midlaw firms that are not particularly profitable during today's booming business climate.

[Anonymous User]

If a recession hits, Kirkland will not be able to collect the $600-700/hr it seems to charge for junior associates. The same can be said of many firms, but Kirkland utilizes a pyramid model with a ton of associates, and many will become dispensable.

Meh. Kirkland is leveraged about 1:1, which is typical. Kirkland has a large bankruptcy practice. They should be in better shape than average during a downturn. All newer and lower rated attorneys are at risk during a recession regardless of firm.

Firms that can charge top of the market rates for associates have the most desirable clients. That is not a disadvantage in an economic downturn.

When choosing a firm I would me more concerned about biglaw/midlaw firms that are not particularly profitable during today's booming business climate.

There is no way Kirkland’s leverage ratio is 1:1, unless you are counting NSPs as “partners.” Kirkland has about 500 NSPs, which are not equivalent to equity partners and are effectively senior associates.

[BeeTeeZ]

Firms raised from $145k to $160k in 2007. That is a far scarier fact.

[Anonymous User]

Firms raised from $145k to $160k in 2007. That is a far scarier fact.

Agreed—we are only at 190 and that’s some bs...with the federal reserve thinking we are growing at 4.6% gdp growth now, it’s time to go to 200k.

[Schotes]

There is no way Kirkland’s leverage ratio is 1:1, unless you are counting NSPs as “partners.” Kirkland has about 500 NSPs, which are not equivalent to equity partners and are effectively senior associates.

Then look at the metric of profit per lawyer. Kirkland is outstanding by that metric. To say Kirkland is risky for new associates is ridiculous.

Leverage doesn't say anything about revenue or profitability. Client relationships and the efficiency of generating profitability from those customers are the critical metrics which reveal the strength of a firm. The V50 firms doing the best in these areas should have the least trauma when the economy eventually turns down.

[2013]

There is no way Kirkland’s leverage ratio is 1:1, unless you are counting NSPs as “partners.” Kirkland has about 500 NSPs, which are not equivalent to equity partners and are effectively senior associates.

Then look at the metric of profit per lawyer. Kirkland is outstanding by that metric. To say Kirkland is risky for new associates is ridiculous.

Leverage doesn't say anything about revenue or profitability. Client relationships and the efficiency of generating profitability from those customers are the critical metrics which reveal the strength of a firm. The V50 firms doing the best in these areas should have the least trauma when the economy eventually turns down.

Kirkland has a high PPL because it charges insane rates. No one is saying the firm isn’t insanely profitable right now. But if work dries up, then people will be kicked to the curb.

Kirkland has around 300 equity partners (forgot where I read it, so may be more or less). It has 1500 non-equity partners and associates. That’s not a low leverage firm.

Latham in ‘07 had great PPL and look what happened.

The firms that will have the biggest cuts are the firms that have the most associates. It’s not necessarily a bad thing. Just pointing out the trends.

[Anonymous User]

If a recession hits, Kirkland will not be able to collect the $600-700/hr it seems to charge for junior associates. The same can be said of many firms, but Kirkland utilizes a pyramid model with a ton of associates, and many will become dispensable.

Meh. Kirkland is leveraged about 1:1, which is typical. Kirkland has a large bankruptcy practice. They should be in better shape than average during a downturn. All newer and lower rated attorneys are at risk during a recession regardless of firm.

Firms that can charge top of the market rates for associates have the most desirable clients. That is not a disadvantage in an economic downturn.

When choosing a firm I would me more concerned about biglaw/midlaw firms that are not particularly profitable during today's booming business climate.

This is so egregiously wrong you should doubt anything this poster writes.

https://abovethelaw.com/2016/05/ny-to-1 ... -leverage/

[Schotes]

Kirkland has a high PPL because it charges insane rates. No one is saying the firm isn’t insanely profitable right now. But if work dries up, then people will be kicked to the curb.

Kirkland has around 300 equity partners (forgot where I read it, so may be more or less). It has 1500 non-equity partners and associates. That’s not a low leverage firm.

Latham in ‘07 had great PPL and look what happened.

The firms that will have the biggest cuts are the firms that have the most associates. It’s not necessarily a bad thing. Just pointing out the trends.

Since Kirkland's partner track is different, and slower to equity partner, a good comparison would need to split the NSPs into two groups. Some are effectively senior associates, some are waiting to be anointed with equity.

Profitability per lawyer avoids this imprecision of partner ratios and gets to the health of the firm. "Partner" is associated with layoffs because equity partners are not at-will employees. This is nice for those partners during a downturn, but says little about risk to associates. The ability to attract and retain high quality clients is the largest determinate of risk.

The safest choice for a SA gig are the healthiest firms with significant business diversity. An example of non-diversity is Houston oil and gas.

[hoos89]

There is no way Kirkland’s leverage ratio is 1:1, unless you are counting NSPs as “partners.” Kirkland has about 500 NSPs, which are not equivalent to equity partners and are effectively senior associates.

Then look at the metric of profit per lawyer. Kirkland is outstanding by that metric. To say Kirkland is risky for new associates is ridiculous.

Leverage doesn't say anything about revenue or profitability. Client relationships and the efficiency of generating profitability from those customers are the critical metrics which reveal the strength of a firm. The V50 firms doing the best in these areas should have the least trauma when the economy eventually turns down.

Leverage DOES say something about how difficult it will be for the firm to sustain a downturn though. Associates are a fixed cost, and reduced work makes it harder to support that cost...moreso for more highly leveraged firms. Obviously Kirkland currently has high profitability because times are good, but that doesn't mean that they will continue to be profitable in a downturn without cutting some fat.

[Anonymous User]

Kirkland has a very strong bankruptcy hedge and its PE practice is not as susceptible to a recession as other firms principle practices. In some ways, the recession will help cash-rich PE buyers, as prices are currently sky high for acquirors and many PE shops lose bids due to competition. The next recession will also likely be less severe than the last. Banks are far less leveraged now than they were in 2007-08 and tax rates are lower.

Will Kirkland have to trim some fat? Likely, but I wouldn’t expect anything close to seeing a Lathaming from them. Also, assuming mass layoffs occur during a recession, it will be easier to get another position as an ex-AmLaw 10 attorney than as an ex-second hundred atty.

The firms that the next recession will nail are the second hundred Amlaw firms that likely shouldn’t have raised salaries, but did anyway. You’ll also see larger firms dip down into the middle market and take work, which will hurt other firms.

[Anonymous User]

Don't forget - Dewey & LeBoeuf collapsed after guaranteeing so much money to rainmakers that failed to deliver. Kirkland has similarly been poaching partners with YUGE multi-year guarantees.

https://www.newyorker.com/magazine/2013 ... collapse-2

[Anonymous User]

Don't forget - Dewey & LeBoeuf collapsed after guaranteeing so much money to rainmakers that failed to deliver. Kirkland has similarly been poaching partners with YUGE multi-year guarantees.

https://www.newyorker.com/magazine/2013 ... collapse-2

There are a ton of differences between Dewey’s hiring and Kirklands. By your metric, any firm that hires significant lateral partners using guarantees is due a collapse. Maybe you should presume that the people running Kirkland remember Dewey and are being careful not to repeat those mistakes; they likely know more about running a law firm than you do.

[Anonymous User]

Don't forget - Dewey & LeBoeuf collapsed after guaranteeing so much money to rainmakers that failed to deliver. Kirkland has similarly been poaching partners with YUGE multi-year guarantees.

https://www.newyorker.com/magazine/2013 ... collapse-2

There are a ton of differences between Dewey’s hiring and Kirklands. By your metric, any firm that hires significant lateral partners using guarantees is due a collapse. Maybe you should presume that the people running Kirkland remember Dewey and are being careful not to repeat those mistakes; they likely know more about running a law firm than you do.

Pretty sure that's what the guys at Dewey said right before the end. Presuming lawyers know anything about running a business is laughable. Maybe you should be more skeptical.

[blkhk]

A recession is always a possibility. But people on this forum have been predicting one literally every since the last one (double dip). Anyone who could do so accurately and confidently would not be on this forum and instead be shorting the market.

As for what you can do for yourself, just be the best associate you can be. When it comes time to trim the fat they won't be firing above average associates. As a summer, IDK the firm you're going to, but summers don't really get a chance to prove themselves. So just be polite and enthusiastic.

Thanks for your response. I chose one of the firms that was considered to have by and large not screwed over their associates during the last recession, with the possible exception of some stealths, so I'm hoping that they'll uphold that reputation if something bad happens again, but I'm just worried that I can do everything right in terms of work and still end up on the streets. If I assume that everything's on the table (ex. getting no-offered from SA, being indefinitely deferred, getting fired 4 months into my first year), how can I best position myself to be able to find a job after that? I guess I'm thinking in terms of networking both within and without the firm, but any advice would be much appreciated.

[Anonymous User]

The quality of discussion here is embarrassing.

Nobody knows anything about firms internal finances, nor what is going to happen in the “coming recession” that has been predicted for the past 5 years now.

The anti Kirkland argument: “Kirkland is so successful and has hired lots of people by offering lots of money. They didn’t hire me. Therefore, they must be punished for their hubris in the next downturn”

Be realistic - if it was your firm that was

(A) pulling in lots of rainmakers
(b) paying large bonuses
(C) had an exceptional bankruptcy hedge
(D) performing well in new markets
(E) growing and hiring quickly

Would you leap to the assumption that it was a bad place for new associates to be?

[Anonymous User]

How about White & Case? I remember reading that they also laid off a lot of people during the downturn. Do you think that the firm would be at risk for the next downturn? (assuming they've learned their lesson).

[Anonymous User]

Don't forget - Dewey & LeBoeuf collapsed after guaranteeing so much money to rainmakers that failed to deliver. Kirkland has similarly been poaching partners with YUGE multi-year guarantees.

https://www.newyorker.com/magazine/2013 ... collapse-2

"The figure is an estimate and not technically a guarantee, since Kirkland pays partners who have equity in the firm based on their shares, the value of which can fluctuate based on the firm’s performance."

There is no way Kirkland’s leverage ratio is 1:1, unless you are counting NSPs as “partners.” Kirkland has about 500 NSPs, which are not equivalent to equity partners and are effectively senior associates.

Then look at the metric of profit per lawyer. Kirkland is outstanding by that metric. To say Kirkland is risky for new associates is ridiculous.

Leverage doesn't say anything about revenue or profitability. Client relationships and the efficiency of generating profitability from those customers are the critical metrics which reveal the strength of a firm. The V50 firms doing the best in these areas should have the least trauma when the economy eventually turns down.

Leverage DOES say something about how difficult it will be for the firm to sustain a downturn though. Associates are a fixed cost, and reduced work makes it harder to support that cost...moreso for more highly leveraged firms. Obviously Kirkland currently has high profitability because times are good, but that doesn't mean that they will continue to be profitable in a downturn without cutting some fat.

According to this article https://abovethelaw.com/2016/05/ny-to-1 ... -leverage/, it doesn't look like Kirkland guarantees any of those salaries but rather just gives a YUGE share allocation.

According to this, based on AmLaw stats, Kirkland had lower leverage (3.61) than SullCrom, Cleary, Simpson, Cravath in 2016. Do you think the associate class has swollen up at such a far greater rate than those firms over the last 2 years to make Kirkland higher leveraged than those firms?

[Anonymous User]

Don't forget - Dewey & LeBoeuf collapsed after guaranteeing so much money to rainmakers that failed to deliver. Kirkland has similarly been poaching partners with YUGE multi-year guarantees.

https://www.newyorker.com/magazine/2013 ... collapse-2

"The figure is an estimate and not technically a guarantee, since Kirkland pays partners who have equity in the firm based on their shares, the value of which can fluctuate based on the firm’s performance."

There is no way Kirkland’s leverage ratio is 1:1, unless you are counting NSPs as “partners.” Kirkland has about 500 NSPs, which are not equivalent to equity partners and are effectively senior associates.

Then look at the metric of profit per lawyer. Kirkland is outstanding by that metric. To say Kirkland is risky for new associates is ridiculous.

Leverage doesn't say anything about revenue or profitability. Client relationships and the efficiency of generating profitability from those customers are the critical metrics which reveal the strength of a firm. The V50 firms doing the best in these areas should have the least trauma when the economy eventually turns down.

Leverage DOES say something about how difficult it will be for the firm to sustain a downturn though. Associates are a fixed cost, and reduced work makes it harder to support that cost...moreso for more highly leveraged firms. Obviously Kirkland currently has high profitability because times are good, but that doesn't mean that they will continue to be profitable in a downturn without cutting some fat.

According to this article https://abovethelaw.com/2016/05/ny-to-1 ... -leverage/, it doesn't look like Kirkland guarantees any of those salaries but rather just gives a YUGE share allocation.

According to this, based on AmLaw stats, Kirkland had lower leverage (3.61) than SullCrom, Cleary, Simpson, Cravath in 2016. Do you think the associate class has swollen up at such a far greater rate than those firms over the last 2 years to make Kirkland higher leveraged than those firms?

In certain offices, absolutely.

[Anonymous User]

Don't forget - Dewey & LeBoeuf collapsed after guaranteeing so much money to rainmakers that failed to deliver. Kirkland has similarly been poaching partners with YUGE multi-year guarantees.

https://www.newyorker.com/magazine/2013 ... collapse-2

"The figure is an estimate and not technically a guarantee, since Kirkland pays partners who have equity in the firm based on their shares, the value of which can fluctuate based on the firm’s performance."

There is no way Kirkland’s leverage ratio is 1:1, unless you are counting NSPs as “partners.” Kirkland has about 500 NSPs, which are not equivalent to equity partners and are effectively senior associates.

Then look at the metric of profit per lawyer. Kirkland is outstanding by that metric. To say Kirkland is risky for new associates is ridiculous.

Leverage doesn't say anything about revenue or profitability. Client relationships and the efficiency of generating profitability from those customers are the critical metrics which reveal the strength of a firm. The V50 firms doing the best in these areas should have the least trauma when the economy eventually turns down.

Leverage DOES say something about how difficult it will be for the firm to sustain a downturn though. Associates are a fixed cost, and reduced work makes it harder to support that cost...moreso for more highly leveraged firms. Obviously Kirkland currently has high profitability because times are good, but that doesn't mean that they will continue to be profitable in a downturn without cutting some fat.

According to this article https://abovethelaw.com/2016/05/ny-to-1 ... -leverage/, it doesn't look like Kirkland guarantees any of those salaries but rather just gives a YUGE share allocation.

According to this, based on AmLaw stats, Kirkland had lower leverage (3.61) than SullCrom, Cleary, Simpson, Cravath in 2016. Do you think the associate class has swollen up at such a far greater rate than those firms over the last 2 years to make Kirkland higher leveraged than those firms?

In certain offices, absolutely.

Found some recent numbers:
Kirkland 4.14 https://www.law.com/law-firm-profile/?i ... land-Ellis
Sullivan 3.95 https://www.law.com/law-firm-profile/?i ... omwell-LLP
Cravath 5.07 https://www.law.com/law-firm-profile/?i ... -Moore-LLP
Simpson 4.28 https://www.law.com/law-firm-profile/?i ... on-Thacher
Cleary 5.46 https://www.law.com/law-firm-profile/?i ... y-Gottlieb
Davis Polk 5.12 https://www.law.com/law-firm-profile/?i ... k-Wardwell
Paul Weiss 5.94 https://www.law.com/law-firm-profile/?i ... Paul-Weiss

Looks like Kirkland's leverage has only surpassed Sullivan over the last two years.

I think its understandable to dislike Kirkland based on perceived culture, but I can't see how anyone can make any reasonable argument to dislike Kirkland based on their financial health.
1) They have less leverage than the vast majority of their peers (although not by much)
2) Their RPL is insanely high
3) They PPP is 5th, behind PW which is 43% more leveraged than KE.
4) They don't waste money or resources on unprofitable practices. They stick to M&A, Funds, Bankruptcy, IP Lit.
5) Their PE clients are not fee sensitive (even the mid-market)
6) Their bankrupcty practice helps hedge them a bit (but don't fool yourself into thinking this is a life boat)
7) Lateral partners are not guaranteed salaries, instead, that 5year/$55M headline you saw is an estimate given the number of shares that Cravath partner received.

The firm is a free-market firm and they will grind you. That RPL is high cause of the hours associates put in, and the rates clients pay. But financially the firm is solid as a rock.

[Anonymous User]

https://www.law.com/americanlawyer/2018 ... y-partner/

Latest #s say KE is 3rd in PPP.

Why would BK only be slight hedge? One of my big factors for picking KE is being able to BK work as a junior if shit goes downhill so am curious for an explanation on that statement.