But these cuts are not layoffs, spokesperson clarifies
Kirkland & Ellis has become the latest law firm to axe associates – this time across its U.S. offices – as deal-making continues to decline globally, although a spokesperson has clarified that the cuts are performance-based.
The world’s highest-grossing law firm with more than 3,000 lawyers and a reported gross revenue of over US$6 billion last 2021 shaved associates off its ranks in California, Utah, Texas, and Chicago after it undertook performance reviews in March, sources said.
Kirkland & Ellis was quick to clarify that the cuts were not layoffs, describing them instead as “performance-based decisions” resulting from the firm’s annual review process for all its lawyers regardless of rank.
Still, the cuts coincided with the ongoing decline in global mergers and acquisitions. A study recently published by Refinitiv showed that the total value of global M&A deals in the first quarter of 2023 was US$580 billion – a 44% plummet from the same period last year and a 23% drop compared to the last quarter of 2022.
New York-founded law firm Simpson, Thacher and Bartlett – the top advisor for full-year rankings by deal value last year – similarly recorded a 72% quarterly drop in the value of global deals for which it served as principal advisor from US$134 billion to US$37 billion, Reuters reported.
Some of the lawyers Kirkland & Ellis cut from its ranks had been hired to meet a burgeoning demand for corporate lawyers seen early in the pandemic, when companies were sealing M&A deals left and right, encouraged by record-low debt and government stimulus measures, the Financial Times reported. Numbers crunched by Leopard Solutions showed that Kirkland & Ellis added over 250 private equity associates between 2020 and 2022.
The same group of associates has dropped from a 601-strong workforce to just 518 since March 2022.
A corporate associate told the Financial Times that the dismissals followed “mid-year reviews”, which hit only a smaller group of Kirkland lawyers called back following a performance review last year.
“It’s been frustrating to see what looks like reckless over-hiring,” an associate affected by the cut told Bloomberg Law.
Kirkland & Ellis already laid off a number of associates last year, likewise following performance reviews.
Kirkland & Ellis associates affected by the firm’s most recent cut will receive their full salary and benefits and remain on the Kirkland and Ellis website until July 31, 2023.
Cooley, Goodwin Procter, Davis Wright Tremaine, and Shearman & Sterling all reported cutting associates earlier this year.
