Review of the year
Cranch ousted as CC US managing partner
In a shock move, Clifford Chance Rogers & Wells US managing partner Larry Cranch stepped down a year early to be replaced by global head of litigation Jim Benedict. This was the latest development in a major shake-up of the firm's global management (19 February).
CC to toughen up on partner performance
Clifford Chance's management sparked outrage among its partners by suggesting they should be subject to individual evaluations. Some partners saw the move as the first in a process that could have ultimately questioned the firm's lockstep system (9 April).
Bloodbath in New York as CC equity is slashed
Clifford Chance cut up to 25 of its US partners out of equity as it battled with a post-merger restructuring of its lockstep.
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| | "A partnership culture is important notwithstanding our size. You've got to preserve that and not be forced down a corporatist route. Management is there to serve"
Peter Cornell, Clifford Chance |
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The firm was in the throes of integrating the legacy Rogers & Wells partners into the Clifford Chance lockstep, and as a result had to downgrade partners from a wide range of practice areas. It was understood that between 20 and 25 partners were to be de-equitised, with some moving from more than 100 points on the lockstep to salaries equivalent to around 50 points (28 May).
CC New York partners take massive pay cutsEight of Clifford Chance's top New York partners agreed to take huge pay cuts, again as the firm was struggling to create a single lockstep post-merger.
After the merger with Rogers & Wells, 10 senior US partners were awarded pay packages way above the top of Clifford Chance's lockstep.
Rogers & Wells' antitrust stars Kevin Arquit and Steven Newborn were given 300 and 275 points respectively. Partners at the top of lockstep received 100 points. One point on the lockstep was equivalent to £8,450, according to the figures to April (16 July).
| Catrin Griffiths reviews a turbulent year for Clifford Chance |
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It was a not a year most of the Clifford Chance management would like to repeat, mostly because of the US saga. In a series of exclusive reports, The Lawyer revealed the extent of the shake-up in the American partnership.
The first inklings came in February, when The Lawyer revealed that US managing partner Larry Cranch was to be replaced by global litigation head and mega-biller Jim Benedict ("Cranch ousted as CC US managing partner", The Lawyer, 19 February). Cranch's departure was one of the most radical changes to the firm's senior management since its 1999 merger.
Then came the first whiff of something even bigger: a proposal to evaluate partner performance was made at a weekend strategy conference in Hammersmith on 31 March. Some voices in the partnership argued that the system was the first in a process which could ultimately question the firm's lockstep system, perceived by some to be already under threat following the firm's mergers with Grimaldi and Rogers & Wells. Indeed, the seeds of discontent had already been sown when Clifford Chance finally merged with Italian alliance partner Grimaldi the previous year, and when it was forced to do an off-lockstep deal to accommodate the Italian firm's more senior partners - something seen as contrary to the one-partnership ethos.
That turbulent Hammersmith retreat was to prove pivotal. At that meeting, the two candidates for the post of deputy chief executive officer - European managing partner Peter Cornell and London managing partner Peter Charlton - spoke to the assembled partners.
Cornell, who managed to portray himself as the outsider despite having been in a senior management position for many years, read the mood of the meeting beautifully, astutely focusing on partnership values. He won. Charlton - the man who took the decision to raise newly-qualified salaries to £50,000 and to move the firm to Canary Wharf - became the unfortunate victim of the backlash against the management. (Still, he did win Partner of the Year at The Lawyer Awards in June.)
And in May came de-equitisation, with up to 20 US partners forced out of equity. (The Lawyer's story even made it into the US press.) This was followed two months later by eight partners volunteering to take cuts in their profit share ("CC New York partners take massive pay cuts", The Lawyer, 16 July). Among them was new US managing partner Jim Benedict, although top billers Kevin Arquit and Steve Newborn are still not part of the lockstep.
But the firm has not had a wholly rough ride this year. It announced turnover figures tantalisingly close to £1bn, at £937m, with average profits per partner at £721,000.
Catrin Griffiths, editor |
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