Angel reveals the truth behind Linklaters' 'realignment'
22 January 2007
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When Tony Angel steps down as managing partner he will have presided over a revolution at Linklaters that has influenced the way in which global law firms operate for ever.
And yet Angel, who steps down from his post in June, has always sought to play down any turbulence during his eight-year tenure. Between 2001 and 2004 scores of partners left the firm. In January 2005 The Lawyer also revealed that a group of exiting German partners launched a bid to dissolve the firm, citing breaches of the partnership agreement.
Speaking exclusively to The Lawyer, Angel acknowledges for the first time the fallout of the firm's restructure. "There were difficulties when you're trying to get people to make a real shift," he admits. "But I never thought of it as saying, 'let's de-equitise a load of partners'. The critical thing in that period was that we were aligning the firm behind a strategy."
Because the departures were part of a defined strategy they did not harm the business, says Angel. "Every time you de-equitise a partner, in theory your profits should go down," he continues. "Actually, through that period our turnover shot up and our profit shot up - I'm talking about absolute profit. It went through the roof."
The numbers bear it out. Although many other magic circle partners routinely deride Linklaters' published figures as a massaging exercise, there is no evidence for that. In 2002 Linklaters' profit per equity partner (PEP) cratered from £800,000 to £650,000. It recorded £734,000 in 2003, only to dip to £674,000 in 2004. After that PEP skyrocketed to £834,000 in 2005 and then to £1.06m in 2006; and in the process Linklaters overtook Freshfields Bruckhaus Deringer on revenue to become the second-largest firm in the world, closing in on Clifford Chance.
And the firm's restructure - or realignment, as Angel prefers to call it - continues. He cites the reshaping of the projects practice and the closing of the trademark filing business. "It's a complete holistic process," he says. Angel is also (after some prodding) candid about who he sees as his biggest competitors. "Although Clifford Chance and A&O [Allen & Overy] are very strong competition in some areas of business, I don't think we worry as much about them as much as we worry about Freshfields," he says. "But Freshfields wouldn't be able to compete with us on banking and capital markets. I think we've done a pretty good job at progressing the firm across the world and across our practices."
Inevitably, Sullivan & Cromwell is the key US firm to watch as far as Linklaters is concerned. "They're doing the deals that we want to do," says Angel.
He warns that complacency is not an option. "Because of the pace at which the world is changing, it's incredibly easy for our position to change too," he says. "In the past you could have rested on your laurels, but this could change in six months. Look at Clifford Chance, which has changed from having a lot of troubles to really motoring."
And lockstep? Angel is passionate on the subject. Although several sources within Linklaters have long maintained that the firm entertained notions of going off lockstep in the US, Angel denies this. "I've no recollection of that," he says, but adds: "Of course, there's been debate about whether to move off lockstep, but those debates have been incredibly short."
In any case, he argues, lockstep is entirely viable in the US. "Look at the top US firms," he says. "Cleary [Gottlieb] is a lockstep firm. Cravath [Swaine & Moore] is a lockstep firm. Wachtell [Lipton Rosen & Katz], Davis Polk [& Wardwell] - it's not a US-UK divide. But I do think it's not possible to be a lockstep firm unless you're at the top of your market. You won't find a lower tier firm with lockstep. Unless you have a very high level of earnings it's very difficult."
Angel says he has not found another job to go to, although it is well known that he would be interested in a senior position in the NHS. "You can't be doing a job as full-on as this one is and be looking around for other things," he protests. "But who knows? Something might come through the door."