Allen & Overy’s (A&O) wide-reaching internal restructuring was triggered by an unexpectedly sharp downturn at the beginning of this year, according to managing partner Wim Dejonghe.
Last week the firm announced ;a ;£44m restructuring that will see it cut 47 partners and 200 fee-earners, spin off its private client business and freeze billing rates at current levels in a direct response to the economic situation (The Lawyer.com, 19 February).
Dejonghe ;said ;the strategy was drawn up as a contingency plan two and a half months ago. The firm decided to put the plan into action on 11 February. Dejonghe ;said ;the management board had been worried about the economic situation since the beginning of December and realised at the beginning of this month that work levels would not pick up.
“Overall the drop’s across the board, across offices and practice areas. There’s not a single place that’s doing better than last year,” he said.
A&O’s restructuring is the most sweeping in the magic circle to date and constitutes a cull of 9 per cent of global partners, fee-earners and support staff. The London office will bear around half of the cuts.
Around 35 partners will also have their positions on the firm’s 15-year lockstep reviewed.
Partners remaining at the firm are being asked to inject a combined total of £11m at the start of the next financial year. The sum equates to £1,000 per equity partner point.
A&O has also jettisoned its private client team of five partners, which will set up as an independent firm but leave its trainees and associates at A&O.