Legg lays off 84 to cut costs

Investment bankers among those let go in a `difficult' move

November 15, 2001|By Bill Atkinson | Bill Atkinson,SUN STAFF

Legg Mason Inc. said yesterday that it has laid off 84 employees, or 1.6 percent of its work force, to cut costs because of the slumping stock market and weak economy.

The employees let go included administrative staff and investment bankers.

The workers were notified yesterday beginning at about 8:30 a.m. that they would no longer have jobs, said Timothy Scheve, chief administrative officer of the Baltimore-based asset-management and brokerage firm.

"Reducing staff levels was a very difficult decision and one that we have not taken lightly," Scheve said.

About half of the people let go worked downtown and in Owings Mills. The others were scattered in offices throughout the country, Scheve said.

Legg Mason employs about 5,200, with 1,630 working in the Baltimore region.

Scheve said the employees were paid a severance based on the number of years at Legg Mason. He declined to say how much the company will save from the layoffs.

"We have thought through the process and we have worked hard to ensure that the people are treated fairly," Scheve said. "Based on what we know today, we believe that this will be the last large-scale reduction that we will need to take."

Legg Mason has been tightening its belt almost since the year began. It adopted a hiring freeze in the spring as part of an overall cost-cutting initiative as profits suffered. In August, it laid off 37 employees who worked in administrative and support staff in the brokerage business.

As a result of the cuts and a decision not to fill jobs lost from attrition, the number of Legg Mason employees has declined to 5,200 from a high of 5,400 in the middle of this year.

Robert Hoban, a debt-ratings specialist who tracks Legg Mason for Standard & Poor's in New York, said the cuts are small compared with those at other companies in the brokerage and money-management business.

"They certainly weren't running a bloated operation before," Hoban said. "A lot of other firms really got out of whack. Because of the conservative way they [Legg Mason] operated in the face of a very good environment ... they are not over-exposed."

Unlike many other firms, Legg Mason has seen its profits hold up rather well despite the downturn in the stock market and the economy, Hoban said.

The company made $30.4 million in the quarter that ended Sept. 30, down 18 percent from $37.2 million in the second quarter of 2000 - a decline that Hoban considered relatively small.

"They are financially very sound," Hoban said. "Comparatively, they are not in a bad spot at all."

Legg Mason isn't the only Baltimore financial firm that has laid off workers.

T. Rowe Price Group Inc. eliminated about 180 positions two weeks ago. In April, the big mutual fund company let go 55 employees.

Ferris, Baker Watts Inc., a brokerage with headquarters in Baltimore and Washington, let go 10 employees in July, mainly high-paid analysts and investment bankers.

Scheve said Legg Mason will continue to look for ways to "reduce cost in all areas."

Shares of Legg Mason rose $1.21 to $47 yesterday.

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