Editors' Blog

Redundancies the exception not the rule... for now

Posted 29/11/2007 by Deal Comment

First San Francisco, then New York, then London, then Newcastle, then New York again – redundancies are popping up in all sorts of places at the moment.

Yesterday’s discovery that New York firm Thacher Proffitt & Wood is poised to make a round of redundancies followed swiftly on from Dickinson Dees’ news that it would be cutting 17 staff from its re-mortgage division due to the current market conditions.

That came after Olswang announced earlier this month that it is set to axe 10 people, including five associates, from its real estate department, as it moves to restructure the practice, while Clifford Chance (CC) axed a six-lawyer structured finance team in New York. Last month Eversheds also announced it was preparing to make 20 staff redundancies across its UK network, while San Francisco-based Heller Ehrman has axed 65 administrative staff throughout its US offices to eliminate overlapping positions and costs.

Such a succession of redundancy announcements hasn’t occurred in the legal market since 2002, when a moribund cross-border transactional market meant the majority of top firms were compelled to make cuts at some point or other. The recent news has even prompted a Career Clinic question on the safety of training contracts in the post credit crunch environment.

But as a respondent to that question says, most of the major firms are well-hedged enough to avoid any sudden desire to cut. The poster argues that the top firms will “be busy for quite a while”.

Most of the redundancy announcements so far have related to very specific circumstances. Heller Ehrman and Eversheds were addressing overlap in support staff, CC had a team working exclusively on reviewing documentation for credit rating agency Standard & Poor’s and Olswang was restructuring a practice it insists it is still expanding.

That said, law firms have a habit of jumping on bandwagons and the cuts may well have spurred some management teams to take a fresh look at their business lines. But for now, at least, these redundancies can safely be regarded as isolated incidents - pockets of targeted cuts, rather than the start of something big.

paul.hodkinson@legalweek.com