Still More on the Cadwalader Layoffs
In our earlier post about the layoffs at Cadwalader, Wickersham & Taft, we praised the firm for its candor. Those of you who weren't already in the profession when the last bubble burst may not recall that many firms, instead of being honest about dismissing associates for economic reasons, tried to cast them as performance-based. Firms should be commended for not taking that path.
But we do have some criticism for the firm as well. While we appreciate the firm sending us the news, it was not very classy to share the layoffs with the media before doing so internally. It's not appropriate for associates to first learn about layoffs at their firm through a blog. As one tipster told us:
"Associates here at CWT are a little in shock right now since the firm has neglected to inform us of the layoffs through an intra-firm email."
Now, in the firm's defense, it appears that perhaps they want to provide such news in person. But even if they notify the affected associates individually and in person, they could at least have sent around a firm-wide email mentioning the overall action.
Some other random things we've been hearing, from different sources:
1. "As I write this to you, CWT laying off associates one by one... A friend of a friend just got the ax. It sounds dreadful there...."2. "If you get laid off, no bonus. MEAN..."
3. The entire Corporate department is meeting today at 5:30 p.m.
4. "I bet most partners weren't even told [about the layoffs]. That's how it worked with the bonus announcement [recall the number-free bonus memo]. Most partners found out at the same time we did."
5. "Nobody knows who the 35 are -- whether they're coming from NY or another office -- or even what department."
6. "I don't think litigation is going to be affected by this. We have people from Global Finance down here doing doc review for us."
There's also lots of good stuff in the comments to our prior post. But we can't vouch for the comments to the same extent that we can vouch for the information above (sent to us by trusted sources whose identities are known to us).
Update / Correction: Speaking of the comments, we have confirmed the truth of this comment:
No, you DO get a bonus, IF you made your hours. But the amount of that bonus is not known....
This is a big story, and we'll be covering it extensively (so if you don't find it interesting, you might want to take the day off from ATL -- we have more traffic right now than our poor servers can handle). Expect an update later today.
If you're at CWT and have firsthand information to share, please email us. If you're afraid of your email being tracked, you can also reach us via Facebook message or AIM (our screen name is in our Facebook profile). Thanks.
(114) Comments
3 mos. severance (less than most people's bonus would have been, assuming it's market)
first.. yeyah
r. gizzle, is that you?
how about some coverage of the O'Melveny layoffs in NY and DC????????
Do they get to use their offices and pretend they are still employed while searching for a job - or are they escorted out today?
3 months' severance is a hell of a lot better than either our clients or their employees expect or receive.
BigLaw wants $$ to compete with IBs? BigLaw has to be prepared for the price tag that those $$ carry.
Those of us who still value culture, though, are saying "We told you so..."
I don't think this will hurt them recruiting wise though, aren't they already the last resort?
r. gizzle, is that you?
3 months' severance is a hell of a lot better than either our clients or their employees expect or receive.
BigLaw wants $$ to compete with IBs? BigLaw has to be prepared for the price tag that those $$ carry.
Those of us who still value culture, though, are saying "We told you so..."
Someone I know got laid off from PriceWC and received 6 mos. salary; TPW offerred 4 mos. How is 3 mos good Anonymous Partner?
No bonus!? That is ridiculous.
I also love how people posting as partners feel like this is putting associates in their place. True, firms can fire whoever they want, but they will have to deal with how the market responds to such firings. Law grads watch for this and have a lot of power over firms.
So go ahead, be a jerk. But your $$ depends on our hours.
Anonymous Partner (12:27) is out of touch with reality. Either that or his "clients or their employees" are in the minor leagues.
No, you DO get a bonus, IF you made your hours.
But the amount of that bonus is not known....
Lat,
I recently heard there were layoffs at Simpson, and others in comments have stated same. What is the DEAL???
3 mos, how typical is this for firm layoffs?
Hey LAT will you PLEASE follow up on OMM?
NYC bonus was for first years $35K - $10K less than market.
Even worse half of the associates didnt make hours and got a half bonus of $17K.
And the layoffs on top of that.
Looks like OMM cant hang in NY.
In fairness to the firm, ALT had ALREADY let the story loose before it had an opportunity to manage it--including by letting the associates know internally.
I wonder of all of this stuff works in reverse as well: Other firms might now feel its OK to rip the band aid off and fire associates, because they are not the first and copy the lay offs.
No doubt about it, this is ugly news for the economy in general.
HAHA - calls for NY to 180K or 190K are now dead; instead associates are fearing for their jobs. This new year is going great!
friend told me sidley has done some as well, tho sounds like it was very snr assocs who were not going to make partner quietly being told to go elsewhere and nothing more firmwide than that...
Anon Partner: assuming you don't have seriously non-BigLaw clients, your statement is hilariously incorrect (at least as to "clients" - I'm sure many "employees" of the "clients" (read Management) do in fact get screwed with no severance - although others have posted relevant exceptions to that). Management severance packages, often well documented, are usually astronomical. Remember that dude at the NYSE? It was so big, the publicity alone got him sued for it. Whether the millions in cash or stock is "3 months salary" or not, depends on how ridiculously well paid they are. But CEOs/COOs/EVPs/GCs don't walk out the door empty-handed.
Not that they couldn't. Unlike BigLaw associates, they make millions and don't have loans (well, I'm not counting yacht loans and $50 mil mortgages - not quite the same thing).
12:30: Shrug. #$%* happens.
Can you imagine how worse things would be if there was the NY to 190 raise? As an incoming associate I welcome the raise, but not if it means my job...
I don't see why it matters at all whether the layoffs are announced, or hidden as "performance" related. Either way, they are performance related.
The 35 who were laid off are probably the 35 weakest associates. Sure, maybe in a normal year only 10 of the weakest would be let go, but there is no way CWT laid off their superstars. They'd rather let them sit idle for 12 months, and have them rather than pay them for 3 months, and lose them forever.
12:30: Shrug. #$%* happens.
The sky is falling!!! The sky is falling!!!
NYC to 190!!!
What'ch u talkin about 12:32?
With the applicant pool for law schools current declining 5 to 10% per year that could diminish the supply of top talent far faster than any minor deviation in demand.
NYC to 190!
1:01 - while that's true, what if CWT has gotten rid of an entire specialized finance division in its NY office - if it's axing everyone doing a particular thing, then it really isn't performance based is it now?
12:53: Without more, that isn't remarkable. There are lot of senior associates informed each year that they won't make partner and encouraged to find other work. It is, in fact, how law firms have to function - whether some associates are kept or none depends on the firm.
I know that in cushy law-firm lalaland, people think that they are entitled to high salaries (regardless of a firm's topline) and high bonuses (regardless of a firm's bottomline). Wake up people! Citi and Merrill are preparing for a mass bloodletting in the next week or so. These are your clients. You are not immune! No one "deserves" anything and yes....layoffs are awful.
However, if you are making a $160 base, even if you are paying off loans, you should have a bit of cash saved for a rainy day. It's unfortunate, but having experienced all the fun of IB layoffs in 2002-2003, it is MUCH worse to labor under the "when is it happening" specter than to just let folks go. Productivity and morale tank. CWT is doing the best it can.
what is the severance?
Are these mostly junior or senior or all of the above?
Interesting article on Bob Link here:
http://www.usnews.com/usnews/biztech/articles/041011/11eespotlight.htm
and a limerick here:
http://www.abovethelaw.com/2008/01/breaking_cadwalader_announces.php#comment-167308
1:01 -- yes, it's probably assumed that the ones let go were not the superstar associates. But if the firm called the layoffs "performance based," then it would be a statement that it considers these associates damaged goods (unqualified to work at the firm). By attributing it to firm economics, the statement is that these associates did nothing to get themselves fired; someone had to go, and this is who they picked. Also, because it's based on economics, then the layoffs presumably were somewhat strategic (based on needs in practice group and class year).
NYC to 190!!!
I bet bob and chris are circle jerking right now in ecstasy of firing people.
The CWT you know today was built on disloyalty and backstabbing assholes like Bob Link and Chris White. They are horrible human beings who will receive their payback in the form of unnatural acts performed upon them by Rock Hudson and John Denver in Kirby Puckett's rape room.
lulz
Be outraged, indignant, haughty or whatever, but whatever your opinion of CWT, comments like 1:27 are patently inappropriate. You should be ashamed of yourself. Seriously.
1:34 someone would like to say hello to you too.
http://z.about.com/d/crime/1/0/x/S/puckett_k.jpg
1:34: AHAHAHHAHAHAAAHAHAHAHAAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHA
1:34: AHAHHAAHAHAHAHAHHAAHHAHAHAHAHAAHHAAHAHHAAHHAHAHHAHAHAAHHHAHAHAHAHAAHHAHAHAHAHAHAAHAHHAHA
This isn't attributable to a general slow down at the firm, so the weakest associates firm-wide are not being laid off. My guess is that the weakest associates in the securitization practice are getting the axe. There are going to be some very good attorneys being let go who are not weak.
In addition, if you think that decisions like this are made purely on the strengths of the associate and are not related to whether you are "liked", you are naive. Firms are businesses but are also the most political organizations around.
wait is 1:34 actually serious?
12:56, a Biglaw associate job is not exactly analogous to a management position that comes with a hefty severance package. I know that Biglaw associates tend to think highly of themselves, but we are more like highly paid "employees" of the "clients" than the CEO or even the GC.
I think it's appropriate when firms provide severance to associates, but get real.
1:01 -
I know of one terrific associate who got laid off - probably because he didn't have the greatest resume and low hours. But really a bad decision.
"patently inappropriate"
Not just inappropriate, PATENTLY inappropriate.
1:34 said "seriously" so I assume she is SUPER SERIOUS
1:34 - is it ok to post merely inappropriate comments here? Is it just the patently inappropriate ones that you take offense to? What about latently inappropriate comments?
Why would anyone expect anything better from the firm founded by a direct descendent of the same General Cadwalader who refused a direct order from General Washington to cross the Delaware river north of Trenton to support Washington's attack on Christmas day, 1776?
2:02 - oh those are just fine. just the patently inappropriate ones. and maybe also the manifestly inappropriate ones as well.
1:34 - is it ok to post merely inappropriate comments here? Is it just the patently inappropriate ones that you take offense to? What about latently inappropriate comments?
Anonymous Partner has a point.
A culture wherein associate loyalty is driven by the bottom line cuts both ways.
That said, I am sick about this news.
I feel very bad for the poor guys and gals called into the converence room today. And I think there is more bad news to come from more firms.
1:34 should be ashamed of herself for posting innappropriate condemnations of factual posts is outrageous. I'm super serious.
I am super cereal. Man Bear Pig is the single most deadliest threat known to all mankind.
EXCELLSIOR !!!!
Maybe a dumb question, but do layoffs usually affect the number of summer associates that a firm gives offers to? Or would a firm laying off associates still be expected to give offers to virtually all of its summer associates?
Cadwalader Summer-Only the raven knows
I probably will affect the % of the group getting a resulting offer, depending on the practice group you are interested in.
It might be a good time to tell every partner who will listen that your life's ambition is BK or litigation work.
Words like "flexible" should work their way into your self descriptions.
Letting it slip that your Fortune 500 GC or CEO uncle asked how things were going would not hurt either.
2:17: You're absolutely right.....that was a dumb question indeed.
2:17 if you have read this board you would have been well warned about CWT and the horrible miscreants that run that shop.
My feeling is that if securtization does not pick up, this will affect their offers. My advice is that you should do work for litigation or groups like tax that nobody wants to work in and kiss ass until your lips turn brown. Get an offer and then look for another firm. CWT is a horrible, miserable place filled with awful human beings. You will go home each night as an associate with your anus sore and your colon bruised.
not a single word about the OMM or simpson layoffs? this has been news for days.... what's the deal?
PLEASE COVER OMM AND SIMPSON!!!
HAHAAAAAAAAA.!!!!!!!!!!!!!!!!
There's always more new associates getting off the bus everyday.
CWT is going to merge with a larger, more diversified national firm.
CWT is going to merge with a larger, more diversified firm
CWT is going to merge with a larger, more diversified firm
And dilute their PPP/equity? Yeah right....not these guys.
OMM had layoffs which was not only hush hush to the outside world but inside the firm as well. NO ONE in the firm has acknowledged that layoffs took place and an inordinate amount of associates didn't get bonuses and/or got bad reviews.
Like last time when NY had layoffs, some layoffs were blamed on performance but most negative performance reviews were decidedly trumped up. People who were stuck on doc review all year were castigated for not writing (this was chronicled on here the last time); people who spent a lot of hours on a particular case and did a good job overall were surprised to find some small assignment given maor play on and negatively reviewed. Just awful treatment of associates.
Many were given to March 15th to leave. The total in NY is about 15 were told to leave and many other suffered "constructive" discharge: denied bonuses or promotion due to negative reviews that were purposely slanted to result in a bad review (in other words, don't let the door hit you in the butt).
The DC office suffered similar offenses but we can't find out the numbers.
Not only isn't anyone talking to ATL but no one in O'Melveny is telling US what is going on.
We had an ACAC meeting yesterday and the partners were told morale was bad. They're probably happy to hear that hoping we'll all leave.
Very poor form.
And dilute their precious 2.9m PPP/equity? Yeah right....not these guys.
Who has the profits to accomodate a merger with CWT and would be willing to work their collection of assholes, idiots and cocksuckers? I call shenanigans on a merger.
If it happens it means CWT is in dire straights and is in fire sale mode.
Should CWT 2L SA's be worried?
3:02 -- Nope.
Chuck Norris recently had the idea to sell his urine as a canned beverage. We know this beverage as Red Bull.
Why stop at 35.. dump all the dead weight. Law firms should constantly be cutting bottom 20% like any high growth company.
Cut 35 associates or 3 partners...hmm... I say both. If I was bob link I would take a CHAINSAW to that place.
3:02- don't worry, but know that if you want to go to CWT you'll have to do litigation or bankruptcy
Actually, Anonymous Partner is not all wrong. I am all for associate job security with sky high salaries, but we have to at least be consistent.
If you threaten to leave the firms which (i.e., separate from the partners who) do not pay you what other associates are making, you really can't complain if the partners decide to do the same - layoff (i.e., separate from) associates who cause the partners to make less than the partners' peers.
All the layoffs were the dead-weight, bottom-of-the-class-from-top-10 law schools. CWT has been carrying dead weight for too long. congrats Bob Link! Kudos to management for having the balls to do what law school admissions won't--sort wheat from chaff.
Cravath could use some dead-weight cutting...
Cravath could use some dead-weight cutting...
We should have all expected this. In the eyes of people like Bob Link, when you raise salaries 10% ... you have to cut 10% of the workforce and make the other 90% work harder. One has to wonder whether a profit factory like that place is really reacting to "market conditions" or whether they're using it as a convenient excuse to thin the staff so that they can keep increasing their PPP while paying higher salaries.
Law schools should do students and industry a favor and cut bottom 10% of class after 1L year. Then Bob Link wouldn't be the bad guy! In my day 1 in 3 associates wouldn't finish law school.
"Law schools should do students and industry a favor and cut bottom 10% of class after 1L year. Then Bob Link wouldn't be the bad guy! In my day 1 in 3 associates wouldn't finish law school."
How did they become associates without finishing law school? In your day, was a J.D. not required?
Legal Assistants at CWT are freaking out -- paralegals are wishing they had not deferred admissions to law school. This place is a shit-show right now! Most people have not even received official word of layoffs, there is no eye-contact in hallways and EVERY door is shut. No one will answer the phone...
Everyone on this board blames the partners... but where are the associates clamoring for a PAY CUT to keep their fellow associates on board.
3:16 is flame: no top-10 law school grads go to CWT.
The firms hiring all these ass-clowns laid off over the last six months should be getting some major billing and respect on this PEOPLE's REPUBLIC associate-slanted law site. How about a feature on the law firms solid and growing enough to hire these sad sack lay-offs?!?!
3:32... just do a quick review of CWT website... numerous top 10 law schools represented. You are clueless
3:32... just do a quick review of CWT website... numerous top 10 law schools represented. You are clueless
I wonder if it's time for firms to stop pretending they are all equal and finally stratify in terms of compensation and quality.
While CWT and OMM are in trouble now, there are firms who did extremely well last year and were considering raises.
Accept your TTT status CWT and OMM.
I went to a top 5 law school, as did many of my colleagues, and I work at CWT
Unlike publicly traded companies with shareholders who demand higher stock prices, law firms are owned by the managers (the partners). Thus, law firm owners seek to cut costs in a completely inneficient way -- by cutting associates, support staff and other relatively poorly paid employees. Publicly traded companies (like investment banks), on the other hand, often cut costs by axing CEOs/CFOs/Managing Directors etc. b/c that's how you can truly and quickly help the bottom line. But if law firms did that, then the owners would be hurting themselves by improving their companies.
It's this pyramid scheme model of law firm economics that makes them, from the associate's perspective, such terrible places to be. When times are good, associate sweat is turned into partner profit. And when times are bad, associates are typically the ones shown the door.
Only competition to attract lateral partners with high PPPs keeps partnership from being a pure sinecure.
So 35 pirates got laid off. No big deal, no one likes pirates anyway. Bob Link is a NINJA...pirates had to see it coming.
people at CWT should start answering phones...the calls are probably from head hunters.
3:38 -- Spot on. It's a pyramid.
Biglaw is the Amway of legal practice?
It was so clear even 4 months ago that this shit was going to happen. As I mentioned months ago, as soon as anyone believes they're indispensable and seeking a raise on top of a bonus on top of a special bonus (when in fact they bring little true value to the table), you're dealing with people who have no perspective.
This shit was so obvious. And rather than telling all associates that they're not worth $200k+, a handful will be fired. A handful to start.
When BigLaw Partners stop trying to keep up with their wealthier IB bertheren, and when new associates accept the fact that they aren't worth $200k, you probably won't see 35 lawyers getting fired at once. But until then, your calls for more money will be met with layoffs, which in terms of karma is wholly appropriate.
Economist is right on point.
You all forget that:
BIG LAW=BIG BUSINESS
Case closed
It was so clear even 4 months ago that this shit was going to happen. As I mentioned months ago, as soon as anyone believes they're indispensable and seeking a raise on top of a bonus on top of a special bonus (when in fact they bring little true value to the table), you're dealing with people who have no perspective.
This shit was so obvious. And rather than telling all associates that they're not worth $200k+, a handful will be fired. A handful to start.
When BigLaw Partners stop trying to keep up with their wealthier IB bertheren, and when new associates accept the fact that they aren't worth $200k, you probably won't see 35 lawyers getting fired at once. But until then, your calls for more money will be met with layoffs, which in terms of karma is wholly appropriate.
CWT is looking better than OMM. The whole world has gone crazy.
Any predictions on what other firms will be laying off associates?
Economist is an idiot. Considered carefully, not a single one of the propositions in his post makes sense.
Capitalism comes to law firms; at last. The old ways are dying. New ones rising.
Maybe we'll end up like major league players. Union scale pay in the minors, a 1/500 chance at the bigs and a 499/500 chance of driving a beer truck for your buddy who made it in the big leagues and bought a beer distributorship when he retired.
You mean 200k worth of utility? Or a market price of 200k? Economics is hard. Also, I'm pretty sure the firings have more to do with the way CWT has decided to run the firm than anything else (compare to Orrick, Sidley etc).
4:25,
what doesn't make sense? The credit and housing crisis became obvious in mid-August. The economy has been showing cracks ever since then. Meanwhile people on here kept clammoring for a raise to 190k, insisting that record bonuses and special-bonuses weren't enough. It seems to me like those calling for raises had no clue which way the wind was blowing. Is that too difficult for you to grasp?
Creative Destruction.... you are most wronger than I've ever done heard.
Everybody acts like associate layoffs are unheard of. Consider this:
"It is with great dismay that, as a result of the reversal in general economic fortunes emanating from excessive speculation in the Markets, the Partners in this enterprise must forthwith sever their ties with fifteen of their assoicated Attorneys."
BigLaw Managing Partner, circa 2008?
No. Abraham Lincoln of Lincoln-Herndon Law Offices, 1853.
Everybody acts like associate layoffs are unheard of. Consider this:
"It is with great dismay that, as a result of the reversal in general economic fortunes emanating from excessive speculation in the Markets, the Partners in this noble enterprise must forthwith sever their ties with fifteen of their associated Attorneys."
BigLaw Managing Partner, circa 2008?
No. Abraham Lincoln of Lincoln-Herndon Law Offices, 1853.
Quote Machine--Wow! perfect!
3:38(2), you're right, but I'm not sure it would work for firms to start cutting partners the way that corporations get rid of management employees to cut costs. Isn't the whole "prestigious law firm" model built on the idea that Fortune 500 companies want to hire an x firm partner to take their case to court or manage their big M&A transaction? There are definitely partners in every firm who are dead weight, but it seems like there would be more transitioning issues if firms started engaging in mass layoffs at the partner level the way some corporations do. I was actually talking to my husband about this recently because his company is going through that process and it was hard for me to imagine a Biglaw firm being able to reassign work in quite the same way that his company is doing.
Thanks Quote Machine, that tripe will feed my family and pay my mortgage. Show some class you a-hole!
Yeah, banks NEVER lay off junior bankers... law firms should be more like that. (Difference is banks don't ANNOUNCE junior layoffs!)
I love it when you babies cry. HERE COME the TOUGH EVALUATIONS!!! GONNA BE SOME "PERFORMANCE" ISSUES" FOR SOME PEOPLE.
P.S. I LOVE IT. LOVE LOVE LOVE IT.
"Thanks Quote Machine, that tripe will feed my family and pay my mortgage. Show some class you a-hole!"
5:16 = Latrell Spreewell?
5:14,
In my practice group, 2 or 3 partners have the clients' ear, run the cases, serve as lead trial counsel etc. Then we have another 2-3 partners who help service the cases much like good senior associates would do (work with experts, write briefs, argue motions, take depos, analyze issues for clients etc. etc.).
If the business our clients were willing to give us was halved, why wouldn't it make more economic sense for the firm to cut 1 senior partner and 1 junior partner, rather than 5 out of the 10 or 12 associates in the group? Such an approach would never happen at my law firm. But it would certainly happen at an I-bank.
YOU"RE FIRED!
I pity the fools who don't go into cross boarder transactional work or bet-the-company litigation.
5:30, good point. Part of the reason I have a hard time picturing partner layoffs is that I'm in a specialized practice area where it's difficult to transition projects to someone else, particularly if there is no "someone else" to take over.