Hang the recession

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  • Laid-off Associates -- This comes on top of the companies decision back in May to reduce base salaries for associates and move toward a performance based compensation plan.The longer a lawyer has been with the firm, the more their pay will be reduced.First year salaries, previously a Biglaw standard $160,000, will be reduced to $145,000. If an associate started in 2004 or earlier, the pay cut is 15%. Those who started in 2005/6 take a 14% cut. And the 2008 class is taking a 10% cut.

Transcript

  • 1. Hang the Recession
    A Case Update
    Sharvon Benjamin
    Luciano Furuti
    Rose Pompey
    Anthony Puente
    Mari Saucedo
    Kelly Schoenherr
  • 2. Agenda
    Introduction/Case Overview
    Struggles of Thacher Proffitt & Wood
    Employee Update
    Sonnenschein Nath & Rosenthal today
    Current unemployment political debate
    Job creation
    Conclusion
    Questions
  • 3. Thacher Proffitt & Wood’s growth was mainly due to mortgage-backed securities.
    Thacher Proffitt & Wood loses 100 attorneys to a competitor.
    Thacher Proffitt & Wood pursues a merger with another firm to keep its doors open.
    Thacher Proffitt & Wood law firm goes out of business.
    During the collapse of the housing market Sonnenchein Nath & Rosenthal implemented a growth plan.
    Sonnenchein Nath & Rosenthal hired attorneys from a failed rival.
    Introduction
  • 4. The Struggle
    Sub-prime crisis strikes
    More than half of Thacher Proffitt & Wood’s attorneys join a competitor’s firm
    Plans for a merger fall through
    Thacher Proffitt & Wood closes it doors
    Thacher Proffitt & Wood Dissolves: Sonnenschein Rescues
  • 5. Thacher Proffitt & Wood’s Decisions
    • 9/11 – TPW employees survived the attack on World Trade Center
    • 6. Invested almost all their work in mortgage-backed securities
    • 7. No diversity in investments
    • 8. Market crashed, causing TW&W’s clients to go bankrupt
    • 9. Refused to merge until it was too late
    • 10. After the decision of a merger the candidate pulled out
    • 11. Spent millions on renovations and leasing
    • 12. Acquired debt of $30 million
  • What action would Sonnenschein Take?
    Sonnenschein, Nath, and Rosenthal saw an increase in demand for people with the skills of former Thatcher Proffitt and Wood attorneys
  • 13. How does this create a competitive advantage for firms?
    Sonnenschein Nath & Rosenthal saw the downturn as a chance to gain market share.
    Hired 100 of rival Thacher’s top attorneys as Thacher dissolved due to the economy
    Thacher’s financial-services lawyers would pair with Sonnenschein’s regulatory and lobbying practices in Washington
    Sonnenschein would hire the Thatcher attorneys at lower salaries than what the market had typically been offering before the economic crunch.
  • 14. What is Countercyclical Strategy?
    Countercyclical Strategy
    • While most firms are downsizing due to the economic slowdown, Sonnenschein Nath and Rosenthal, committed to hire in order to be ready for the upturn in demand for services.
  • Why did Sonnenschein see a need for financial services specialty lawyers?
    BIGGEST BAIL OUT IN HISTORY OF BANKS AND WALL STREET FIRMS
    Strategy was to be ready for increased demand for talented litigators.
  • 15. What is Sonnenschein’s position in the world of law today?
    According to AM Law
  • 16. Salary Reductions & Lay-offs
    Sonnenschein Nath & Rosenthal plans to cut associate salaries, beginning June 1st.
    Sonnenschein Nath & Rosenthal recently laid off an undisclosed amount of associates.
    Sonnenschein Nath & Rosenthal reduces the salaries of their associates.
  • 17. Current Unemployment
    Unemployment rate is 9.7%
    Payroll employment rose 431,000 in May
    Obama Administration strongly encourages job creation in the private sector
  • 18. Job Creation
    Senate passed a $15 million job-creation bill
    Policy makers predict unemployment rate below 9% by the end of 2011.
    Banks are stabilizing but not improving rapidly.
  • 19. Conclusion
  • 20. Questions
  • 21. Agency Group. (n.d.). The Employment Situation in May. Retrieved June 07, 2010, from FDCH Regulatory Intelligence Database: Business Source Premier database
    American City Business Journal. (2009, September 2). Sonnenschein lays off lawyers. Retrieved June 07, 2010, from Business Journals: http://www.bizjournals.com/sanjose/stories/2009/08/31/daily54.html
    Bario, D., & Staff. (2009). Proffitt and Loss. Legal Week.
    Fortado, L. (2008, December 23). Thacher Proffitt, 160-Year-Old Law Firm, to close. Retrieved June 09, 2010, from Bloomberg.com: http://www.bloomberg.com/apps/news?pid=email_en&sid=a9Oe4mPmsSkg
    Matthews, S. (2010, June 04). Lockhart Says Job Creation Too Weak for Big Cut in Unemployment. Retrieved June 07, 2010, from Bloomberg.com: http://www.bloomberg.com/apps/news?pid=email_en&sid=ap9vBhX95PvA
    Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2010). Human Resource Management: Gaining A Competitive Advantage. New York: McGraw-Hill/Irwin.
    Sonnenschein Nath & Rosenthal Profits Drop 3%. (2010). JD Journal.
    Weiss, D. C. (2008). Thacher Proffitt Announces Expected Dissolution. ABA Journal .
    References