Gunderson and Kirkland latest to cut US associates
Silicon Valley firm axes 10% of US staff; global giant also sees departures following March performance reviews
California firm Gunderson Dettmer is cutting around 10% of its lawyers, paralegals and staff in the US as a performance review at global giant Kirkland & Ellis also sparks departures.
Gunderson's cuts were being made in response to ‘current macroeconomic and market conditions’ the firm told staff in a memo obtained by Above the Law yesterday, shortly after it emerged that Kirkland had also cut attorneys, although the firm said they were not “lay offs”.
Gunderson has also determined that incoming associates graduating this spring could have their start dates with the firm deferred ‘on a case-by-case basis’.
The firm is known for working with venture capital firms and emerging companies, making it particularly vulnerable to the sharp downturn affecting the West Coast tech sector following a protracted boom.
It said in the memo that ‘while many venture-backed and publicly traded technology and life sciences companies are facing economic headwinds, these challenges are unfortunately part of a business cycle after the last few years of exceptional growth'.
The memo added: ‘We believe in the power of the innovation ecosystem and remain confident that the firm’s strategy of being the leading provider of legal services in these markets positions us for long-term success.’
Gunderson said it would provide severance benefits and “other out-placement support” to staff who were being let go, and would give semi-monthly stipends for any incoming associates who are deferred.
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The news makes Gunderson the latest US firm to cut staff recently, having recruited heavily during a sustained US deal boom that finally ran out of steam last year.
In January Goodwin Procter announced it was cutting around 5% of its ‘timekeeper’ and operational personnel across its US offices, while last December tech-focused firm Cooley said it was letting go of 150 employees in the US including 78 lawyers.
Meanwhile, the cuts at Kirkland are reported to have been focused in California, Texas, Utah and Chicago, following performance reviews in March. The firm said the cuts were “not layoffs” and instead were “performance-based decisions resulting directly from our attorney review process, just like we do every year for all attorneys at all levels”.
According to the Financial Times, ‘tens of lawyers’ have been affected while Bloomberg Law reported that departing Kirkland associates will receive full salary and benefits and stay on the firm’s website until 31 July.
News of the departures came shortly before Kirkland reported a healthy 8% in 2022 revenue to $6.5bn against a 2% rise in profit per equity partner (PEP) to $7.5m, according to Legal Business.
The results, which follow a landmark 25% rise in turnover and 19% rise in PEP in 2021, mark the Chicago giant’s most muted year-on-year performance for some time but are nevertheless healthy given that the global slowdown in transactional work has seen a number of top US firms post revenue and PEP declines.
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