Ashurst moves towards greater alignment in Oz but denies partner cuts
1 February 2013 | By Joshua Freedman
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Ashurst’s Australia managing partner John Carrington has maintained that the firm’s partner headcount will not change “in any substantial way” as he deflects reports of a major partnership cull in the jurisdiction.
Carrington declined to comment specifically on claims that the firm was planning to cut up to 50 equity partners in Australia but said the number of equity partners would “ebb and flow”.
His reaction follows a report in The Australian Financial Review that over the next month Carrington would likely inform between 20 and 50 local equity partners that they were being asked to leave or de-equitised.
He told The Lawyer this morning (1 February): “We are committed to being a full-service firm in the sense of the services we offer. We wish to remain a leading domestic law firm. People will come and go for a variety of different reasons. We don’t see that the overall number of partners is going to change in any substantial way.”
He said 2012 had been a difficult year, leading to “adjustments”. In December it emerged the firm was cutting jobs in Australia amid difficult market conditions (13 December 2012).
Carrington said: “Like a lot of firms we made some adjustments, but nothing particularly substantial. Indeed, other Australian businesses have done that.”
The firm is currently in an interim period between non-financial tie-up going live last year and the planned vote on a full financial merger in early 2014.
A partner cull Down Under has been viewed as a likely exercise to bring the Australian business in line with Ashurst’s UK arm amid other moves to integrate the firms financially.
When originally announcing the tie-up in September 2011, Ashurst senior partner Charlie Geffen said no “reshaping” of Blakes was necessary as the deal would increase revenue for the Australian offices. However, comparable average profit per equity (PEP) was a condition of the full merger all along (26 September 2011).
Blakes’ PEP was within 10 per cent of Ashurst’s at the time, Geffen said in September 2011. The gap is now smaller, Carrington said.
Australian domestic firm Blake Dawson switched from an all-equity partnership roughly three years ago prior to its 2012 tie-up with Ashurst.
Carrington said: “We changed our process over three years ago, before we announced the merger, and we had a decline the number of equity partners and an increase in the number of what we call fixed-income partners.”
The decision was taken because it was “increasingly difficult to bring in younger partners”, he said.
He added: “The ratio between fixed-income partners and equity partners will ebb and flow. We’re managing our business in accordance with our local market,” adding that legacy Blakes’ revenue was only marginally down on this time last year. At the moment it’s a far more optimistic outlook in Australia than 15 months ago.”
The firm said it has 190 partners and 800 lawyers in Australia. It has a total of 132 equity partners and 57 salaried partners across Australia and the legacy Blakes arm in Asia, which combined with Ashurst’s Asian business last year, according to The Australian Financial Review.
The firm has appointed a team of partners to work on financial alignment, which will report back to colleagues at the annual partner retreat taking place in Paris at the end of this month.
In another alignment exercise, the UK arm revamped its capital structure by asking partners to put capital into the firm up front for the first time. Blakes partners already invested in the firm in this way, but Ashurst partners’ previously saw a proportion of profits held back instead (10 September 2012).
Separately, Carrington confirmed other planned alignment measures such as an integrated practice leadership setup and client list.
He said: “We’re moving towards a global management structure, we’re doing a large number of joint pitches together, we have a global integrated client list, we’re looking at secondments of lawyers and secondments of staff. At the initial stage we’re setting up a structure that will include our corporate teams, our banking teams to work together. We’re looking at ways we get the teams to work together pre-financial integration.”
Partners of the legacy Ashurst LLP will also find out later this month where they sit on this year’s lockstep, which in previous years has seen partners’ positions on the pay ladder shaken up.
In 2011 17 partners were move to a lower rung in a major restructuring (8 August 2011), while last year a smaller number of partners are understood to have been affected.