Ashurst says goodbye to the million-pound PEP club as profit drops by a third

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  • Perhaps because they did not lay off dozens of lawyers?

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  • Simon should be congratulated for his candour in dealing with what must be a difficult situation. The next and far harder step is not the measurement of ROI on the new investment but to question the very sustainability of the current business model. When partner drawings and other 'establishment' costs are well below the fees personally generated it is a recipe for future problems. It ensures that control of the pricing mechanism passes from the firm to its clients - placing further problems on the economic model. One solution is to de-equitise a significant proportion of the partners and adopt a corporate operating model. A bitter pill but probably inevitable. The impact on lawyers who are currently 5-10 years PQE is not pleasant as the majority will never become partners.

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  • I agree entirely with Ashley Balls. As a soon-to-be-NQ (and a soon to be job hunting one at that, as my office came up with an impressively miserly 18% trainee retention rate this year), I look at the career path of the next 20-30 years and shudder at the obvious impossibility of the current legal business model surviving.

    The phrase 'too many cooks' comes to mind. You'd be forgiven for sneaking an extra 'r' in there as well...

    I think firms will have to start shaking themselves out of their current mindset, and realise that the current fee generating model relies almost entirely on associates working themselves ragged with the prospect of partnership (and PEP) dangled in front of them.

    Partners are often drawing money out of the business and relying on their underlings to replace it from the sweat of their collective brows - you could almost make a comparison to a Ponzi scheme here. The only way you get money out of the firm is when someone else down the chain is putting it in.

    It'll hurt (a lot), but a top-down shakeup of how firms are operated is (in my view) the only way to guarantee this and the next generations of lawyers' loyalty. We simply no longer believe that partnership is going to be a realistic opportunity in our careers.

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  • As a matter a fact , besides the partner redundancies mentioned in the press - Ashurst has done a cost cutting exercise by laying off a number of associates as well as senior non-legal staff. This has been done without implementing a formal redundancy procedure (i.e. on the cheap). At least at A&O, Links, etc. people were offered a proper redundancy package.

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