As a result of declining issuance in the real estate and structured finance markets, Thacher Proffitt & Wood has joined the ranks of a number of other law firms, banks and asset management firms that have laid off staff in these departments.
Recently, Thacher notified 24 associates in those practice areas that if there is not a substantial improvement in the mortgage market, they will be let go in January. If the associates choose to leave the firm on their own, they will be compensated through the end of March, Thacher said. The firm also offered first-year associates in its structured finance and real estate groups a four-month severance package should they choose to leave the firm on their own. The firm said if these associates stay, they will not have enough work to build experience in the early stages of their careers.
"These are good associates and they don't deserve to have this happen, but we just found ourselves overstaffed in a couple of very specific areas, primarily the people working on subprime matters," said Paul Tvetenstrand, managing partner and chairman of the firm's executive committee. "We were waiting [to make layoffs] but we have not seen any signs of the market coming back anytime soon."
Tvetenstrand maintained that structured finance will continue to remain a core part of Thacher's practice, despite the decline in issuance. The firm was ranked number one last year in Thomson Financial's issuer counsel for U.S. ABS league tables and number six in Thomson's U.S. MBS issuer counsel rankings for the same period. Although there are still a variety of ABS-related legal issues that the firm could address, the work involved in these cases is mostly done by the firm's partners, Tvetenstrand said.
Thacher will not undergo a restructuring as a result of the layoffs, which are solely based on economic reasons, the firm said. "It is just a matter of the firm getting itself to the right size, and from there nothing else is changing as far as the firm is concerned," Tvetenstrand said. He said the long-term prospects for Thacher remain very good.
As for the future of other employees at the law firm, there are no plans for additional layoffs right now, but "who knows what the future brings?" Tvetenstrand said. Indeed, the outlook for the mortgage industry "is more of the same," he said.
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