Bingham McCutchen has found a way to expand during the recession. Just weeks after losing 11 lawyers (5 partners and 6 associates) to Morgan Lewis, Bingham McCutchen has acquired McKee Nelson. The American Lawyer reports:

After enduring a rough few years caused by the collapse of the structured finance market, the elite specialty firm of McKee Nelson has agreed to be acquired by the larger Bingham McCutchen.

Partners at both firms were informed Monday morning of the merger, which is scheduled to take effect August 1. The combined firm will be called Bingham McCutchen, and will include all of McKee Nelson’s lawyers.

No word on whether the McKee attorneys have the CHARACTER to become Bingham attorneys. But the merger looks good on paper:

McKee Nelson, which is known as one of the pre-eminent firms for tax planning and tax litigation, was viewed by Bingham as an attractive addition. “It’s really rare to find a firm that is this size that has three market-leading practices,” says Bingham chairman Jay Zimmerman, referring to McKee’s expertise in tax, financial institution litigation, and capital markets-structured finance. Structured finance might be moribund now, but Zimmerman sees it as an area worth investing in. “It will be part of our longterm strategy for serving the financial institution industry.”

How does this work on the McKee side of the ledger? We check in after the jump.

As many of you know, CDO’s are dead. Derivatives are dead. And lawyers who used to work on these financial instruments are either laid off, waiting to be laid off, or quickly becoming experts in the exciting field of bankruptcy and restructuring.

But what is a firm to do with all those structured experts sitting around and planning employment discrimination lawsuits? McKee Nelson has an interesting idea: sell to someone else.

AmLaw Daily and Legal Week reported this morning that McKee Nelson was in advanced talks to send a team of its corporate attorneys to the U.K. firm Ashurst:

The McKee Nelson group informed the firm’s partnership of the talks yesterday, indicating that the team — which covers structured finance, derivatives and municipal finance — was almost certain to move, according to the report. Ashurst is hoping that a number of associates also will join the group.

Above the Law obtained McKee’s statement officially announcing the move this afternoon:

McKee Nelson LLP announced today that its municipal financial products and equity derivatives practices, as well as a portion of its CDO and corporate practice, will move to its international structured finance alliance partner, the UK law firm Ashurst.

That seems to beat the bag out of what Pillsbury is offering today.

Details on how many associates will be making the move are still being worked out, but moving large portions of practice groups that have hit the skids — instead of firing them — seems positively excellent in today’s market.

Granted, McKee Nelson has already been through two rounds of layoffs. But a move like this shows that the firm is at least thinking outside of the box when it comes to managing an oversupply of attorneys during an economic crisis. Maybe this will mean something to law students come recruitment time?

Read the full McKee Nelson press release, after the jump.

Layoffs are a fact of life in this terrible economy. But not all layoffs are created equal. They can be handled well, or they can be handled… poorly.

McKee Nelson, which last November laid off 32 (17 lawyers and 15 staff), recently announced a new round of cuts. This time the firm let go of 46 employees: six lawyers and 40 staffers.

While unfortunate, at least McKee Nelson handled the matter with class:

In good times, people are generally happy with lockstep bonus structures. In bad times, people start grumbling about “carrying” less lucrative practice groups. In these times… I think there was a novel about “Flies” that explained the situation.

For those who prefer a more “performance based” bonus scheme, McKee Nelson might be the place for you. Yesterday, the firm announced their bonus structure. A firm spokesperson explains the process to ATL:

McKee Nelson has always paid bonuses to associates based on a combination of performance and hours. As a general rule, we have not published a bonus scale or sent a bonus memo to associates as bonuses are determined and communicated on an individual basis. An exception was made last year as part of our voluntary program.

… I will tell you that 2008 McKee Nelson bonuses were based on the Cravath scale but with our customary variation in the bonus awards made to individual lawyers based on performance and hours.

Remember that McKee Nelson recently laid off 32 people, including 17 corporate finance attorneys. Paying bonuses at all really is a “bonus.”

After the jump, McKee Nelson tipsters share their thoughts.

Today’s firm-wide meeting at McKee Nelson did not yield good news. A statement from the firm reveals the extent of the bloodletting:

This morning, McKee Nelson LLP laid off 17 of its corporate/finance associates, reducing this practice from 94 to 77 attorneys. The layoffs are concentrated in the MBS, ABS and CDO parts of our capital markets practice.

Our firm also laid off 15 administrative staff. All of the affected attorneys and staff members are in good standing at the firm. None of these layoffs are performance based.

At least the firm was honest about the reason for the layoffs. No stealth layoff / performance review rhetoric from the firm partners:

For the past 16 months, the partners of this firm have been committed to bearing the costs of the overcapacity in our structured finance group in order to keep our team intact. The devastation that befell the credit markets in September, however, was unprecedented. We have analyzed and created a projection of what we believe the structured finance business will look like over the next two years and what resources, capabilities and experience will be required to do that work. This layoff is a necessary part of the firm’s adjustment to this new reality.

More details after the jump.

Is something going down at McKee Nelson today? A tipster reports that there is a surprise, all-attorney video conference scheduled for 1:30 today.

Managing partner William Nelson announced the meeting succinctly via firm-wide email this morning:

There will be an all attorney meeting at 1:30PM.

Recently, these mystery meetings have been held to release good news. In September, Covington & Burling held a surprise meeting to announce the acquisition of Heller Ehrman’s IP department (admittedly, that was not good news for Heller Ehrman). Last month, Jenner & Block held one to reassure associates (shortly before a number of partners were let go).

Okay… so these meetings aren’t always “good news,” but they have been “good spin.”

What does the future hold for McKee Nelson? Well, one of their biggest clients is JPMorgan Chase, one of the only banks left standing. Things can’t be too bad, right?

We’ll let you know where the chips fall.

Update (2:15): McKee Nelson confirmed that they laid off 17 associates and 15 staffers today. Read additional coverage here.

Earlier: Jenner & Block’s Mystery Meeting
Musical Chairs: Covington & Burling Snaps Up Heller’s IP Department
Layoff Update: Jenner & Block

This morning we brought you a special sneak preview of the 2009 Vault law firm rankings (to be released in full on Tuesday, August 12, over at the Vault website). We passed along two compilations: (1) firms ranked 26-50 by prestige, and (2) firms 11-20 on the “best to work for” list.

Now, as promised, we bring you the balance of the rankings: firms 1-50 by prestige, and all 20 of the “best to work for” firms.

Check out the lists, plus comment from Vault law editor Brian Dalton, after the jump.

An interesting article in today’s New York Times — by Lynnley Browning, author of the earlier Biglaw perks piece — focuses on the subprime mortgage mess and current investigations into the adequacy of disclosures to investors.

Investigators are focused on Wall Street, but lawyers involved in the securitization process may also face scrutiny. Government investigation is the last thing these struggling law firms need, as they try to retool in the face of a grim outlook for structured finance and real estate work.

The article focuses on McKee Nelson:

McKee Nelson burst onto the scene in 1999 and quickly grabbed lucrative Wall Street work from long-established rivals. William F. Nelson, one of its co-founders, said the firm, which is known for its sophisticated tax work, did not employ any special legal maneuvers to outflank its competitors. “There’s no secret, magic elixir that we sprinkled,” Mr. Nelson said.

In any case, the mortgage turmoil is now hitting the highly regarded McKee Nelson hard. The firm recently pared its structured finance department to 80 lawyers from about 115 through buyouts, sabbaticals and transfers to other departments. More cuts are unlikely, a spokeswoman said.

So that’s good news. And the firm is trying to take lemons and make the proverbial lemonade:

[A]fter profiting from the mortgage boom, McKee Nelson is now positioning itself to profit from the bust by riding the coming wave of lawsuits. In January, the firm flew its partners and their spouses to Charleston, S.C., aboard four Delta commuter jets, to map out its strategy.

“We’re heavily committed to doing more litigation,” Mr. Nelson said. The firm hopes to represent investment banks, hedge funds and other financial companies, as well as their executives, in a variety of litigation, he said.

And maybe law firms, too, as lawsuits and investigations proliferate? See, e.g., Cadwalader, facing a $70 million lawsuit arising out of a securitization deal gone bad.

Small Law Firm’s Big Role in Bundling Mortgages [New York Times]

We previously commended the firm of McKee Nelson for the steps it’s taking to accommodate its associates in the wake of the credit crunch. Credit market woes have significantly affected the firm’s once booming capital markets practice, but the firm is bending over backwards not to do layoffs.

So far backwards, in fact, that we’re going to go even farther: we wish we worked at MN. To paraphrase Crazy Eddie, the offers they’re making to associates are INSANE.

On Friday, the firm offered these options to its associates:

(1) a full bonus, and four months’ pay, to anyone willing to depart from the firm; or

(2) the option to take a year-long sabbatical, at 40 percent pay, AND with a full bonus for 2007.

Wow. How is option (2) — or even option (1), for people who wanted to change jobs or career paths anyway — not the sweetest deal ever? You get a year off from the Biglaw grind, at 40 percent of your pay (McKee is on the $160K scale), AND with a year-end bonus? (Their bonus table appears here — the firm is paying standard year-end bonuses, although not “special” bonuses.)

There are some caveats, according to our tipsters. First, there’s no guarantee of a job at the end of the sabbatical — whether you can return to the firm will depend on what the business climate looks like in a year. Second, you’re supposed to do something public-interest-oriented during that year — or, as the managing partner put it, “something that makes the world better.” So you can’t just go to Ibiza and party for twelve months (although cynics claim that turning lawyers into layabouts “makes the world better”).

On the other hand, there’s no requirement that you work for a 501(c)(3) during your sabbatical; the concept has some flexibility. Could you perhaps use the year — and the money — to study painting, or to finish the novel you started writing back in law school?

So many lawyers talk about the dreams that died when they went to law school. How is the McKee Nelson sabbatical program not a great opportunity to resurrect those dreams, with the luxury of free time and financial security?

Earlier: Nationwide Personnel Reconfiguration Watch: McKee Nelson

The firm of McKee Nelson — which has been having some issues, thanks to the credit crunch, but is making valiant efforts to deal with them — just announced its standard bonus scale. It is availing itself of the fig leaf provided by Cravath’s bifurcated bonus scheme: it’s not paying “special” bonuses, just regular year-end bonuses.

As explained in the memo:

[A]n individual associate’s bonus will be determined by the quality of such associate’s work, his or her overall contribution to the Firm, and the number of billable hours worked. [B]ased on these factors certain associates will receive more than, and others less than, the standard scale for their class.

Full memo from Bill Will Nelson, after the jump.

How quickly times have changed. A little over a month ago, Thacher Proffitt & Wood couldn’t hire people fast enough. At Boston University School of Law, they relaxed their traditional on-campus interview standards, to try and get people through the door. From a BU tipster:

“Thacher Proffitt & Wood’ lowers standards — see below. Maybe Loyola 2L can get an interview with them, if he has a 3.9 at Loyola.”

Date: Fri, 14 Sep 2007 17:38:38 -0400 (EDT)
From: [BU recruiting]
Subject: Thacher Proffitt & Wood Resume Collection Still Open

There is still time to submit your resume to Thacher Proffitt & Wood’s resume collection on Symplicity. Hiring criteria: Minimum of a 3.4 and a journal is preferred. Only hiring in Structured Finance and Real Estate. New York Office only. If interested, please submit your resume, transcript and cover letter by NOON on Monday, September 17th through their resume collection in the “2007 Late OCI” session under the OCI tab on Symplicity.

Thanks and have a great weekend!

Now, of course, structured finance and real estate ain’t looking so hot, thanks to the mortgage mess and credit crunch. Firms that are big in structured finance are struggling to keep their lawyers busy. See, e.g., McKee Nelson (previously discussed here).

More about Thacher Proffitt, after the jump.

As noted recently in The American Lawyer, the credit market crisis isn’t good news for firms with big securitization / structured finance practices. We previously discussed the topic here.

One firm mentioned in Ben Hallman and Aruna Viswanatha’s AmLaw article was McKee Nelson. Hallman and Viswanatha wrote: “[S]maller niche firms are more vulnerable [to credit market problems]. About half of McKee Nelson’s 200 lawyers, and almost forty percent of Thacher Proffitt & Wood’s 350 attorneys, work in structured finance.”

Today we received this tip about McKee Nelson:

Name partners Bill McKee and Will Nelson had a meeting with all associates and counsel on Monday afternoon. While the mantra “we are not going to have any layoffs” was repeated over and over, lawyers were encouraged to take sabbaticals, consider changing practice groups to tax or litigation, or “self-identify” to take a “change of venue” to another firm or field. They announced that each associate and counsel would meet individually with hiring partners in New York and DC.

At one such meeting, held yesterday, a first-year was told that, while there was no timeline required, the firm would help the associate find another job and was given the name and web address of a recommended recruiter to work with.

Sounds like a layoff to me! Oddly, despite encouraging these “changes of venue” the firm still intends to follow industry standard for bonuses for this year (whatever that means).

We reached out to the firm for comment. Founding partner William Nelson responded promptly to our inquiry:

The difference between a layoff and what we are doing is that no one is losing their job. As a result of the fundamental disruption in the credit markets, we do not have enough work to keep all of our structured finance lawyers fully busy. We want to keep these lawyers productively engaged while the market sorts itself out.

To do that, we have given people options that include moving into other areas of our practice where we have significant need for additional lawyers, possible secondment to clients, or taking sabbaticals (which many associates have requested in the past). In addition, we asked any lawyers who already are planning a near-term career change or change of venue (meaning moving to a different firm or in-house) to please let us know and we would help them make that move.

We thank Mr. Nelson for his response. While the credit slowdown and its consequences for law firms are certainly regrettable, McKee Nelson is taking reasonable and sensible steps to address a difficult situation. Nobody is being forced to leave the firm; people are just being encouraged to consider all their options.

A special request: please go easy on McKee Nelson in the comments. The firm should be commended for (1) its openness and transparency with respect to its current situation, and (2) responding to us so promptly and in such detail. We would like firms to feel “incentivized” to come forward with such information and to cooperate with ATL’s inquiries. Thanks.

P.S. Please note that our filing of this post under the Layoffs category should not be construed as a statement that layoffs are taking place. We use this tag rather liberally, applying it to any post that arguably falls within the penumbra of layoff talk (which may or may not be founded).

Earlier: More Woe Ahead for Private Equity and Mortgage-Backed Securities Lawyers?

That seems to be the theme of this very interesting article, by Ben Hallman and Aruna Viswanatha, in the current issue of the American Lawyer. It echoes the problems we discussed back in this post, concerning the $70 million malpractice suit filed against Cadwalader, in connection with the firm’s mortgage-backed securities practice.

Here’s an excerpt from the American Lawyer piece:

Even scarier for Debevoise, and for all firms with big private equity practices, was the fact that no new deals were popping up to take the place of those that were stuck. Those fears are shared by lawyers who work on mortgage-backed securities, a market that has completely shut down.

The fears are well justified for both groups, and for any lawyer whose business is linked to the availability of easy credit. In June there were nearly $100 billion worth of private-label mortgage securitization issuances. The next month, they were half that. “There’s always an element of cyclicality,” says Paul, Weiss, Rifkind, Wharton & Garrison structured finance partner Jordan Yarett, “but the implosion of credit is somewhat shocking.”

Indeed. More depressing discussion, after the jump.

We’ve been providing salary news updates in the comments because, due to technical difficulties, it’s more reliable than trying to do so here on the main page. For your reference, here are links to the latest announcements:

1. Allen & Overy: Confirmed. Memo is here.

2. Debevoise & Plimpton: Confirmed. Memo is here.

3. McKee Nelson: Confirmed. Memo is here.

(We will spare you the details of the boring debate over whether they should be considered a DC firm with a very large New York office, which is the obvious preference of McKee Nelson’s media relations people, or a firm that’s roughly split between the two cities. How many D.C. associates can dance on the head of a pin?)

4. Schulte Roth & Zabel: Confirmed. Transmittal email for PDF memo is here.

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Paging Biglaw boys: Is the retroactive portion of your pay burning a whole in your pocket? Are you trying to figure out how to spend $1,000 in found money?

Fret not. Have we got an idea for you:

For the High-End Bathroom, Something Unexpected [New York Times]