£100K profit hike predicted for equity partners as magic circle firm slashes internal bureaucracy
Clifford Chance to save £40m as Childs wields axe on costs" />Clifford Chance’s aggressive cost-cutting drive is set to yield a massive saving of £40m next year – £15m more than originally predicted by chief operating officer (COO) David Childs. The saving represents some £100,000 extra profit per equity partner (PEP) over the next two years.
The magic circle firm’s ferocious push on costs has included centralising all the internal business services, including HR, IT, property management and global procurement and will un-doubtedly mean some redundancies among support staff.
The Lawyer can also reveal that, as part of the same initiative, the firm is experimenting with outsourcing document production to India. The pilot is of limited scope and starts next month.
Childs was appointed COO in late 2003 by managing partner Peter Cornell with a specific brief to improve profitability following a dismal couple of years, which have seen Clifford Chance slip down the profitability league in The The Lawyer 100 Annual Report. Childs said: “We’re determined to become more profitable and, like everyone, we’re looking at costs.”
Clifford Chance insiders are already predicting average PEP to jump 15 per cent to approximately £645,000 at the end of the year, from an average of £562,000; plateau partners are expected to make some £700,000 compared with a previous figure of £630,000.
While that profit improvement will claw back some of the ground lost last year, when average PEP dived by over 13 per cent, the projected figures still fall short of the management’s target of £830,000 this year for plateau partners. Internal sources are now predicting plateau profit at around £900,000 for 2005-06.
Last month The Lawyer reported that Clifford Chance’s global revenues were flat at the half-year stage, but it is understood that London’s turnover is up 6 per cent on last year.
The new get-tough app-roach has brought about two radical moves this year: the considerable downsizing of Clifford Chance’s West Coast presence in the summer, and the closure of the Berlin office, first reported by The Lawyer (29 November).