White collar pink slips hit big law firms

Dan Slater:

This morning, the partnership of Cadwalader, Wickersham & Taft is slated to inform 96 lawyers — a group spanning from first-year associates to counsel — that they will be laid off. 90 of the 96 cuts will come out of the real estate finance and securitization practices, said the firm’s chairman, Chris White. Most of the affected lawyers, said White, are in the New York, Charlotte and London offices, with “one or two” in Washington. The 96 layoffs are in addition to the 35 lawyers the firm laid off in January.

Last evening, White, and the head of Cadwalader’s litigation practice, Greg Markel, invited the Law Blog to a 40th floor conference room, where they explained the move.

White said that real estate finance and securitization — areas that he referred to, alternatively, but not necessarily inconsistently, as “discrete areas of the firm” and “a large part of the practice” — grew “very rapidly” over the past five years, focusing principally in the area of commercial mortgage-backed securities. “Our finance department was involved in every major leveraged buyout last year,” said White, including Blackstone’s $23 billion acquisition of Equity Office Properties.

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White explained that, in 2004, there were only $98 billion worth of mortgage-backed securities issued. In 2008, he said, that number ballooned to $314 billion. “So we grew right along with client demand. And now that market has contracted severely. That $314 billion from last year will go to roughly $60 billion in 2008 — an 80% contraction.” White said he expects that market to come back, and, in anticipation, is retaining 150 real estate finance and securitization lawyers.

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This is a further reflection of how far mortgage backed securities have fallen from favor. Cadwaladar is a huge firm and the cuts are not insignificant. While the partners obviously thought the people they are letting go could not transition into other areas of the firm practice, they will have to do so somewhere else or make a career change. Will the Democrats offer retraining for out of work mortgage backed securities lawyers? In the legal business the trial lawyers who can stay out of trouble probably have the most job security.