Magic Circle
There is mixed news for magic circle associates. Once again Linklaters and Clifford Chance are the biggest internal promoters, appointing 95 and 88 new partners internally over the past three years respectively. A&O also fares well, with 67 internal partner appointments since 2004-05. But associates at Freshfields have, unsurprisingly, suffered in the wake of the firm’s restructuring. Freshfields has made just 48 internal appointments since 2004-05, including a 2006-07 low of just 11. This stacks up against a general picture of retrenchment, including the cull of 100 equity partners in the 18 months to April 2007. But as the firm nears the end of this transitionary period, which has included the overhaul of its all-equity partnership to introduce a salaried partnership tier, things are beginning to look up for the firm’s associates – even if the new structure will add another step in the ladder to equity.
Despite the changes underway at Freshfields, the magic circle continues to do well in terms of equity prospects. At Linklaters the partnership is 80 per cent equity, with the majority of non-equity partners in overseas jurisdictions. A&O is just a whisker behind with 79.6 per cent, but Clifford Chance scores lowest – just 64.7 per cent of its partnership is equity.
However, any associates from other firms hoping to break into the magic circle equity should aim to make the transition sooner rather than later, as the magic circle continued to make few partner-level lateral hires in London, compared with those made at associate level. For example, of A&O’s 13 external partner hires in 2006-07, only two were in London. Associates in the magic circle’s banking and finance and corporate-related practice groups continue to have the best partnership potential, with even Freshfields making up six in corporate and one in finance in 2006-07.
Laterals v promotions
DLA Piper remains the biggest internal promoter after the magic circle, with 74internal partnership appointments in the past three years within its European, Middle East and Asia arm alone.
But the firm shows how truly international it has become in the top lateral hirers table, bringing in a staggering 220 partners – a figure not even equalled by the global figures of the international top 30 firms in London.
But despite DLA Piper presenting a positive prospect for lateral hires, things are far less clear for the firm’s associates. While 74 internal partnership appointments may sound impressive, it actually only equates to promoting around 5 per cent to its partnership each year.
Other big lateral hirers in the past three years have included Taylor Wessing, Cobbetts, Halliwells and Hill Dickinson, although the last three firms’ performances can largely be explained away as the result of mergers (see Merger Mayhem). Halliwells has also been quietly promoting internal candidates, with 49 homegrown partners in three years, beating Freshfields and Norton Rose on total promotions.
Taylor Wessing, meanwhile, has been on an aggressive expansion campaign, taking on 55 lateral hires and making37 internal promotions during the past three years, although this tapered off in 2007-07, with a total of just 16appointments. Laterals have consistently outweighed internal promotions, with the growth largely focused on the firm’s UK-German axis.
Things are gloomy for associates at as wa the of other, largely national and regional, firms. For the past three years lateral shave outnumbered internal promotions at more than 16 firms in the UK 100, including Addleshaws, BLP, Olswang and Stephenson Harwood. In several cases this is due directly to merger for example, Hill Dickinson (39 more laterals than promotions) and HBJ Gateley Wareing (35 more laterals than promotions). But in this surprisingly long list, Clarke Willmott, Clyde & Co (both with 19 more laterals) and BLP (17 more laterals) have no reason other than a desire for rapid expansion. BLP has steadily increased is growth rate to peak at 13 internal and 17 external appointments in 2006-07.
If you are looking to be a lateral and mulling your options, there is no hard and fast rule on calculating which firm you are most likely to make equity at. The best way is to compare the number of lateral hires as a percentage of total intake with the number of equity partners as a percentage of total partnership, and make a judgement call. A quick glance down the table throws up the obvious benefits of Dundas & Wilson’s all-equity partnership to the firm’s 16 laterals since 2004-05.
Prospects for the 11 laterals that Fladgate Fielder has taken on in the past three years are also promising, with 80 per cent of the firm’s partners holding equity, as are the chances for Pannone’s 22 laterals, with equity accounting for 84.3 per cent of the partnership.
Several firms have resolutely refused to make lateral hires in the past three years, opting instead for organic growth.
Bristows, Dickson Minto, Slaughters and Travers Smith offer the best prospects for associates concerned about being pipped to the partnership post by external forces.
All have good track records for internal promotions, including Slaughters, which has increased internal appointments year-on-year for the past three years. But the corporate powerhouse did break with tradition in 2007, making a rare lateral in the shape of Hong Kong partner Lisa Chung, who rejoined the corporate team after a year-long spell in-house at Morgan Stanley.
No promotions
Surprisingly, there are 14 firms in the UK 100 that did not make any internal promotions in 2006-07. The dunces cap goes to Bircham Dyson Bell, which failed to make up any of its associates for the third consecutive year. Managing partner Guy Vincent’s stated aim is “to see us break through the £50m barrier by 2011”, but at what cost? To counteract the lack of promotions, the firm has, however, introduced a career development programme and competency framework for all lawyers in a bid to improve associate retention.
Avalon is the only other firm to have failed to promote any lawyers into its partnership, although this is unsurprising given that the Warrington-based firm has just two partners and relies heavily on non-qualified legal staff.
By comparison, Lawrence Graham, which has 205 qualified lawyers, has not made an internal promotions since 2004-05. This is despite the firm losing four business and finance partners in 2007 and corporate head Christopher Tite targeting more than 50 per cent growth in the group’s revenue within two years.
Bristows and Cobbetts, meanwhile, are mulling over their internal promotion options for 2007-08 – little relief for those associates who already missed out in 2007-07. Cobbetts has postponed its promotions as the firm draws up plans for the adoption of a new, more flexible corporate structure from the start of the 2007-08 financial year. Bristows is likely to defer any appointments for 2007-08 until the summer as the firm reorganises after the shock defection of five IP partners – one-fifth of its partnership – to set up a boutique firm this March.
Other firms that have failed to promoted in 2006-07 were Blake Lapthorn Tarlo Lyons, Forsters, Irwin Mitchell, Kennedys, Martineau Johnson, Mischon de Reya, Morgan Cole, Stephenson Harwood and Watson Burton. All have instead opted for lateral hires, with the notable exceptions of Forsters and Morgan Cole.
Partner woes
All the focus on associate retention may have seen some firms take their eyes off an even bigger issue – partner attrition. Of the firms that provided details, Cobbetts has lost 31.3 per cent of its partnership (or 36 partners) since 2005 due to a combination of the inevitable fallout from repeated mergers during the past three years and a redundancy programme to shed 20 partners.
Howes Percival, Lovells and Manches have also suffered from partner attrition rates of more than 20 per cent. For Lovells this has been a largely deliberate shake-up, with managing partner David Harris pushing through one of the biggest partner redundancy programmes in 2005 ever witnessed in the City in a bid to bolster revenue. Howes Percival and Manches have not been quite so lucky, suffering a spate of losses to local rivals. Manches has seen 12 partners depart in two years, while Howes Percival lost eight (although one of these is still with the firm in a reduced role).
While this is all disappointing news, these are the firms that came clean about their partner attrition rates. What do those firms that refused to disclose partner departure figures (yes, that includes you Baker & McKenzie and Clifford Chance) have to hide?
