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.
  • Hang the recession

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