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Cadwalader, Wickersham & Taft laid off 96 U.S. and UK lawyers this week. All but a handful worked in its real estate finance and securitization practices.

The New York-based firm, whose rapid growth in recent years stemmed from tying its fortunes to booming mortgage-backed securities issuance, becomes the latest large law firm to undertake mass layoffs after the boom turned into a bust. This is round two for Cadwalader, which cut 35 lawyers in January.

"With CMBS (commercial mortgage-backed securities) issuance now at a small fraction of previous levels, we are making these personnel adjustments in response to this change in demand. In September 2008, the firm will have 580 lawyers, the same number we were in January 2006," the firm said Wednesday in a statement quoted by the New York Law Journal. It had about 720 lawyers at the end of 2007, the newspaper says.

The Wall Street Journal's Law Blog reports that the attorneys being laid off range from first-year associates to counsel. Most worked in the New York, Charlotte, N.C., or London offices. A Cadwalader executive said all will receive severance pay through year-end.

Ninety of the 96 departees come out of the real estate finance and securitization practices, whose ranks will shrink by almost 40 percent. Those practices will be left with 150 lawyers, Cadwalader Chairman Chris White told the WSJ. He said the feasibility of moving associates from shrinking practices like real estate finance to hot ones like litigation is limited by that fact that, "at the third, fourth and fifth years, lawyers aren’t fungible."

Cadwalader's Web site says the firm "is recognized as the dominant issuer’s and underwriter’s counsel in the CMBS industry."

Other prominent law firms that have laid off attorneys due to the plunge in MBS issuance include Thacher Proffitt & Wood, and McKee Nelson.