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Orrick's Baxter: In this economy, no practice area is so robust it's bursting at the seams

Posted 14/11/2008 by Zach Lowe

The Am Law Daily chatted with Ralph Baxter (pictured), chairman of Orrick Herrington & Sutcliffe, a few hours after the firm announced it was laying off 40 lawyers - associates and counsel - and 35 staff members.

Hi, Ralph. When did you make this decision?

"About three weeks ago. The firm leadership gathered for a meeting and we concluded we probably needed to do this. Unlike other firms, we did not do layoffs in January or earlier in the year. We waited. But we concluded we could no longer wait. That's what the numbers kept telling us."

You've mentioned you did your best to cut costs and move lawyers around, out of the areas hit by the lay offs - real estate, corporate and structured finance. What steps precisely did the firm take?

"For example, we cut out all non-essential travel at all our offices around the world. We told people, 'Do it another way, even if it's not optimal.' We postponed the bi-annual meetings each practice group has, where all the lawyers from each group travel to one place to meet. We stopped all associate hiring and we postponed hiring certain staff positions. We also shifted some people to other practice areas. A couple went to Hong Kong. It all amounted to a lot of money, but when it was all said and done, the numbers told us we still had a problem. In this economy, no practice area is so robust it's just bursting at the seams."

What do you say to people who will look at your decision to hire 27 former Heller lawyers in early October, a month before this decision?

"You take these two facts together (the Heller hirings and the layoffs), and you get a focused picture of Orrick. We're bullish about the future, bullish about the role of lawyers in global finance, and we are boldly taking action to diversify Orrick's practice. All of the Heller lawyers who joined us were in practice areas that are litigation-oriented. Compared with the layoffs, it's apples and oranges. They are mostly partners, and they bring business with them."

Were the laid off associates clustered at a certain level of experience?

"No. I don't have the exact demographics, but the only clustering was in the practice areas."

You've mentioned your severance packages being above market. What were they exactly?

"We haven't made all the details public, but this I can tell you: for lawyers based in America, they are getting full severance through April - that's five months. And we're going to subsidise their COBRA payments."

You obviously made a decision to do this openly instead of laying people off in small groups and claiming the dismissals are performance-related. Why go that route?

"From the very beginning, we all recognised the importance of transparency. When we met three weeks ago, we decided, whatever we're going to do, we're going to be transparent about it. We told the affected lawyers first. Then we told the entire firm before we issued any release to the media, and then we told the external world."

Do you anticipate any more layoffs?

"This is the end, as far as we can see. Our intention is for this to be it."

This article first appeared on The Am Law Daily blog on americanlawyer.com, Legal Week's US sister title.