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Latham & Watkins managing partner Bob Dell has today spoken out about the firm’s record 440 layoffs.
Earlier today, the US firm announced its plans to cull 190 associates and 250 paralegal and support staff employees (27 Feb 2009).
The news followed a profits drop at Latham of 21 per cent for the 2008 financial year.
Earlier today, Dell told The Lawyer the decision to axe staff across the network had been discussed since last year.
“We’d been looking at cost-cutting measures and discussing the troubled economy since early 2008,” said Dell. “But it wasn’t clear there’d be a recession. It was really the fourth quarter of last year that accelerated the decision. There’d been a number of bank failures and it was obvious the economy was not likely to recover soon.”
Latham’s cost-cutting before today involved freezing associate salaries in December last year, restricting travel and a number of other measures. Ultimately, they proved insufficient.
“We were in a position of over capacity,” admitted Dell. “We’d been in the midst of a robust and thriving economy and had responded to that by growing at a rate of about 15 per cent annually. At the beginning of 2008 we knew we were over capacity and we were evaluating how best to deal with this.”
The past 12 months, which saw Latham launch three offices simultaneously in Abu Dhabi, Dubai and Qatar, have been particularly costly for the firm. But Dell defended the Middle East launch, arguing that the drivers that took Latham to the region have proven to be well founded.
“We have won a number of instructions on restructurings in the region,” Dell said. “The world has changed now but we don’t make decisions like that based on what will happen in the next year. It’s a long-term investment.”
Despite the profits drop and today’s layoffs, Dell also ruled out any office closures from Latham’s international network.