VLG and Gunderson shed staff as downturn digs in

US West Coast firms have responded to sluggish technology and corporate markets by retrenching. Venture Law Group (VLG) and Gunderson Dettmer Stough Villeneuve Franklin & Hachigian have sacrificed lawyers in an attempt to stave off the slowdown.
Just two years ago, Gunderson ignited a salary war throughout the industry when it raised associate salaries by 30 per cent.
Gunderson has now shed 16 associates and a further 28 support staff, while VLG has cut 10 legal jobs and 22 others. This is the second round of job losses at VLG. The firm had already instigated a series of cost-cutting measures to offset market difficulties.
VLG partner Don Keller said: "We're not seeing any dramatic changes in the business environment, so we feel that we need to be the right size to match that environment."
In June, The Lawyer reported that VLG would let more than 20 staff go; and reports in September outlined the firm's plans to put off the arrival of 13 associates for an indefinite period.
The firm is still pursuing its policy of taking equity in clients. Keller said that the 1999 fund has already made a profit, although he was reluctant to speculate on the performance of the 2000 fund. He denied that there was a problem with the firm's business model. "We're actually bullish about the long term," he stated.
A memorandum from Robert V Gunderson Jr, on behalf of the Gunderson partners, blamed the slowdown and the terrorist attacks of 11 September for the cutbacks. He said: "By any measure, 2001 has been an extraordinarily difficult year."
Gunderson will shed associates from its California and Texas offices, leaving Boston and New York unscathed for the time being. The firm had aggressively pursued the emerging growth company marketplace since its inception in 1995. It duly suffered when the dotcom bubble burst, but Gunderson Jr argued: "Although we participated in the dotcom boom, we were not dependent on it.
"We believe the course we've pursued has positioned us extremely well. We also believe the long-term fundamentals of our practice remain very sound.
"In the blink of an eye, however, the events of 11 September have changed the short-term to mid-term outlook significantly. Against this background, the dilemma we faced was that the size of our organisation in California and Texas was too large relative to the levels of activity we could foresee over the next year or two.
"We had only two choices: maintain the status quo or [become the] right size," he concluded. The 'right size' for Gunderson necessitated the 16 associate cuts. The firm has no plans to shelve this year's intake of 20 first-year associates.
The VLG and Gunderson layoffs follow cuts made by West Coast counterparts. Cooley Godward slashed 86 associate posts in August; Fenwick & West, too, laid off 32 associates; and this month also witnessed a rationalisation of associate numbers at both Skjerven Morrill Mac-Pherson and Crosby Heafey Roach & May.