Fall in profits leads to corporate cuts; New York and Silicon Valley bear the brunt
Shearman & Sterling is slashing a massive 10 per cent of its US corporate lawyers as it battles with the M&A slowdown. Partners across the US have been asked to carry out thorough performance reviews among their associates and then lay off those who do not measure up. The biggest cuts will be in the 1,000-lawyer firm's New York office, although the Silicon Valley practice is also understood to be hit. The cuts come as the firm faces the prospect of vastly decreased figures for 2001. Shearmans, like most US firms, has a calendar financial year, so it already has a fair idea of how the numbers will stack up. Sources say that the firm is expecting to bring in less than 90 per cent of last year's profits, when equity partners took home an average of $1.35m (£945,300). Turnover was $590m (£413.1m) in 2000. The cuts are the first among the big New York players, as only West Coast technology law firms have so far made such extensive layoffs. Davis Polk & Wardwell is the only other top-tier New York firm to have taken decisive action against the slowdown, telling its lawyers not to expect their usual end-of-year bonuses, but saying that there will be no layoffs. The Shearmans process is ongoing, with lawyers being told over the next few weeks that they have only a few months to find themselves new jobs. One recruiter in New York said that he had seen 12 assistant CVs from Shearmans in the last week, and that rivals were seeing the same numbers. There are currently no plans for the same cuts in the European offices, with both the London and German offices still reporting a lot of work. The firm claims that the moves are part of the normal review process and the result of a falloff in staff attrition. It normally expects around 20 per cent of lawyers to leave each year, but with the economy dipping, many of that 20 per cent are sticking around. A spokesperson for Shearmans said: "In the current economic conditions, we're making some difficult decisions in our ongoing review process. "We expect our lawyer turnover rate this year to be the same as that of the last five years, and we expect to have substantially more associates at the end of this year than at the end of last year."