Brian Sullivan, the firm's managing partner for global financial institutions, said: "Mergers and acquisitions business is really down. Equities are slow. Some of the plans for growth that we had are simply not there any more."
He added that while there was still demand by financial institutions to fill key positions, "there is no more 'I need five salesmen and three traders.' That business is not there for anyone."
About 15 consultants and 50 staff altogether in financial services lost their jobs at Heidrick & Struggles last week, Sullivan said.
They included two of the nine partners at the London office. One was Karen Morgan Thomas, an asset management specialist. Two associates in London also went.
The departures come after the firm made a series of high-level hirings in London in the past year or so.
Sullivan said consultants were also laid off in New York, San Francisco, Hong Kong, Oslo and elsewhere.
The cuts were part of 300 layoffs - 13% of the workforce - announced last Wednesday by Heidrick & Struggles throughout its areas of business, which include technology and healthcare as well as financial services.
The firm said it was making the cuts because of weak economic conditions in the US and Europe. They would lead to savings of $35 million annually. After the announcement, a report by Goldman Sachs commented: "While these work-force reductions are a bit late, it is probably deep enough to make a real impact."
Heidrick & Struggles is one of the few recruitment firms in financial services that has announced significant lay offs this year. Another is Korn/Ferry, also a global giant, which said in February that it was cutting staff in the US by about 10% because of the economic downturn.
However some recruitment firms in London have also been shedding staff, or not replacing those who leave. Sean Springer, managing director of the headhunters Napier Scott, said "The industry generally this year has taken a hammering. A lot of companies have been hurt."
The slowdown is reflected in share prices. Heidrick and Struggles' shares have lost two thirds of their value since last July, although the firm announced record revenues and earnings in the first quarter of 2001.
Korn/Ferry's share price is down by half since last July. Robert Walters' shares are down by more than a third since their high point last year. Michael Page's shares however are trading above the price they were issued at in April this year.
Nancy Garrison Jenn, an executive search consultant, said she did not expect other firms to cut staff on the same scale as Heidrick & Struggles. "In the last year or so they have expanded very fast," she said. "Other firms did not hire so much."
The company said in April that it had hired 135 consultants and their support staff in all sectors in the previous 12 months.
Sullivan said that Heidrick & Struggles remained confident that its strategy of offering boutique-style financial services expertise on a global platform would succeed.
His own New York boutique was bought by Heidrick & Struggles in 1999, making Sullivan the firm's largest single shareholder.
In London, the firm almost merged with the niche headhunters Baines Gwinner in 2000, but the plans fell through.
Heidrick & Struggles then made a string of high-profile hirings at partner level, however. They include Rupert Channing and Elizabeth Hammond, who joined from TMP Worldwide. They had previously been at The Consulting Group, which had been taken over by TMP.
Other partners who arrived recently at Heidrick & Struggles include Sonamara Jeffreys and Daryl Adachi, who both joined from Armstrong International. Andrew Elliott came from Baines Gwinner.
Together with Barbara Valaperti and Simon Harrison, who have worked at Heidrick & Struggles for many years, they comprise the seven remaining partners in the London office.
Sullivan added that outside financial services, about 22 people, including three or four consultants, had lost their jobs in the UK in last week's redundancies.