Addleshaws to cut 40 jobs after 17 per cent profit drop
Addleshaw Goddard has begun a redundancy consultation among its support staff at the end of a financial year that saw net profit drop by 17 per cent.
Paul Devitt
The news comes as the firm introduces a host of structural and strategic changes, including the launch of offices in Singapore and Dubai. The offices, which are slated to open later this year, will focus on international arbitration.
According to the firm as many as 40 staff members could see their jobs made redundant as part of the 30-day consultation. All those at risk are in the firm’s business services teams, which comprise HR, business development, IT, facilities, knowledge and learning and risk. No redundancies are envisioned for fee-earners, according to the firm.
The firm is also consulting with the 114 members of its defined benefit (DB) pension schemes about closing the funds to further accruals. The schemes have been closed to new entrants for some time, with anyone who is not a member of the final salary pension given the option to save via a defined contribution (DC) scheme.
Under the terms of the consultation, the firm proposes that everyone in the DB scheme should transfer their pension pots to the DC scheme.
The redundancies come as Addleshaw’s net profit fell 17 per cent from £41.3m in 2009-10 to £34.4m.
Addleshaws is also set to transfer most of its non-partner services and costs into a new service company, which will be a wholly owned subsidiary of the LLP, in a bid to become more tax efficient in light of the 50 per cent higher rate of income tax.
In a statement managing partner Paul Devitt said: “We need to make changes and improvements to take best advantage of the new environment we now operate in - one of opportunity and increased busyness and yet one where there’s a need for greater efficiency and to deliver differently and better for our clients. Even allowing for current economic and market pressures, the returns we generated from the business last year were disappointing and we have a very clear strategy and vision to drive better performance this year and in future years.
“We need to reduce our costs, but the focus is not simply about cost cutting. Our business remains in a strong position and we continue to plan and invest appropriately for the future. We’re confident that the full range of measures being proposed, and decisions taken around the tactics, focus and implementation of our strategy will enhance the long-term strength and competitiveness of our business.”
As reported in The Lawyer yesterday, the firm has also merged its governance board and executive leadership team to create a unitary board, and reduced the number of partners in management roles (23 May 2011).
Readers' comments (14)
Marx | 24-May-2011 11:31 am
So partners see their profits fall and decide to get rid of a load of support staff and shaft the remaining support staff in their pension pots. Nice. What kind of pension provision do AG partners have?
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Anonymous | 24-May-2011 12:09 pm
More bad publicity for the firm after the all the changes that have happened especially in IT - seems to be a conflict in the strategic direction. When it hits the profits there is a lack of faith in what the management team are doing!!
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Anon | 24-May-2011 1:13 pm
Sadly City law firms are one of the most striking exemplars of the (lack of) values in the UK over the past 10 - 15 years: narcissism, greed, selfishness, paranoia, an obsession with money, short-termism and sociopathy are the guiding lights.
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Sandy | 24-May-2011 4:56 pm
Firms with a strong reputation for international arbitration and healthly profits have struggled to make a big impression in Dubai (eg Herbert Smith and Lovells), so it's hard to see how that 'ínvestment' is going to generate a return for AG, which lacks a strong reputation or top end profits to attract top talent.
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Dubai partner | 24-May-2011 5:00 pm
How deeply buried in the sand would your head need to be (no pun intended) to think opening in Dubai is a good idea right now?
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Anonymous | 24-May-2011 5:48 pm
Why is it any announcement like this somehow gets mixed up with "delivering a better service for clients". This has nothing to do with client work, and the legal sector cannot continue to sustain the PEP levels it has for the last 15 years. Partners at AG and elsewhere are living in fantasy land.
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Simples | 24-May-2011 7:39 pm
Top screws the bottom to try and stay top.
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Rural bliss | 24-May-2011 9:09 pm
Why do people like Paul Devitt insist on speaking in such dreadful cliches about delivering to their clients, driving better performance and developing strategies to enhance performance?
Do they really write this garbage thenmselves? Or is it written by some lame-brain financial PR firm for them to read out like a robot?
The net result is that such statements are treated with derision. How refreshing it would be to hear someone who sounded like a real person speaking in ordinary language and sounding like he believed it.
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Anon | 25-May-2011 12:02 pm
(Neo-liberal crony) capitalism isn't working.
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Anonymous | 25-May-2011 1:06 pm
"Rural Bliss" - they really do write it themselves - i can assure you of that. I completely agree. It would make such a refreshing change if Paul were to speak in plain English - the firm is going down the outsourcing route and the result is that it must look at its own central costs in doing so. I wonder how many of the firm's board/committee members are active fee earners, as opposed to decision/waffle makers. Seems like it could do with making some more money. You would have thought after two years of making continuous redundancies the firm might have decided its strategy by now.... Of course, sorry, i forgot, they have. Dubai. Sure it will be a real money maker for them??? Oh deary me. So, i await the next story in 6 months of yet more redundancies
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Mike Smythe | 25-May-2011 11:54 pm
Anonyomous - you are completely on the money. A 17% drop in profits, coupled with the northern partners rebelling and forcing management to abandon important reforms on remuneration suggests a firm at a crossroads. Of course, Devitt and Burch have been awfully naive: turkeys do not vote for Christmas, and Addleshaws have too many under-performing equity partners who want to maintain their lifestyles without working for it. It will be very interesting to see how the firm does this year, and whether they can keep their star performers on the back of these results. Watch this space...
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Anonymous | 26-May-2011 8:52 am
As someone who practised in Dubai for several years, I can tell you that for Addleshaw Goddard to open there is madness.
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Anonymous | 26-May-2011 6:25 pm
Because £34.4m profit is not good at all is it?!
Show the company are looking out for the big guys at the top. Not the people that have given everything to the company for years. They don't seem to matter now?
If it wasn't for people at the so called "bottom" the company wouldn't be as succesful as it is.
Like everyone has said, opening in Dubai is not a wise move in the current climate. So, in another 6 months time is it going to be yet more redundancies for the people that are the actual structure of AG and got the company to where it is today?
Shooting themselves in the foot much?
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Anonymous | 27-May-2011 4:53 pm
There was a time when it's staff felt proud to work at AG and used to love working here. I don't know any non fee earner that still feels that way any more. The old AG values are long gone and in their drive to push profits higher and higher over the last few years, they've managed to alienate and demotivate their support staff to the point that redundancy is now a welcome relief to many. It's no surprise that AG no longer makes it into The Times' 100 best places to work list any more and very much a sign of the times (pardon the pun) here at AG.
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