Layoffs at Microsoft

We consider inhouse layoffs an abomination. Cut the outside-counsel spend first, we say.

Still, it happens. Back in March we identified a handful of companies that had been forced to cut their legal staff.

Even earlier this year, we culled some layoff information from the broader Microsoft cost-cutting announcement. At the time, Microsoft CEO Ballmer announced a broad cut of 1,400 people across various corporate functions. Microsoft’s legal function, which it calls LCA (Legal & Corporate Affairs) was included, but we never knew how many.

After the jump, The National Law Journal has gotten some more information on the cuts, from which we extrapolate numbers, and cutbacks on panel counsel.

The NLJ sat down with Microsoft GC Brad Smith for a cover feature called “The Great Recession.” In it, Smith reports that the law department’s budget was cut by 15% and head count was reduced by 5%. According to the piece, “[b]efore the cuts, the company’s legal department had a $900 million annual budget and 1,050 employees, 43% of them attorneys.”

That means approximately 53 people were cut, of which (assuming lawyers and staff were cut in proportion to their overall numbers) about 23 would have been lawyers.

The $135 million he had to cut from the budget came from the RIF, requesting (and apparently getting) fee reductions of 10%, and “mov[ing] farther away from the billable-hour model.” Oh, and a healthy dose of vetting bills more closely.

While it doesn’t lead directly to savings, Microsoft also trimmed its outside-counsel panel down to 10 preferred US advisors. Among those cut was K&L Gates, Chairman Bill’s father’s eponymous firm. According to Legal Week,

Arnold & Porter and Sullivan & Cromwell were among the other firms removed from the roster, which was initially put in place in 2005. The new list of firms includes Cadwalader Wickersham & Taft, Covington & Burling, Orrick Herrington & Sutcliffe, Sidley Austin and Weil Gotshal & Manges.

Related posts:

1. Lawyer Layoffs at Microsoft
2. Microsoft Takes First Step into Debt Markets
3. Microsoft – Yahoo. Billions but Boring
4. Layoffs Hit Inhouse, Too
5. This Week in Layoffs – 4/10/09