Clifford Chance's PEP slides to £733,000 at end of turbulent year

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  • Only £730,000????? That's got to really hurt...... Actually, given the year CC has just had I'm surprised it isn't lower. And turnover isn't too bad either - didn't all their clients go bust in the last year? Have they actually been doing loads of work we've never heard about or has the effect of the weak pound and their massive international network really boosted the numbers? Interesting.

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  • So you mean they got rid of all those associeates and still didn't manage to keep their profits over a mill? Shame.

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  • Wonder what the PEP would be like if they hadn't sacked all those staff.

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  • It will get worse before it gets any better. Really glad I dont work at CC anymore. Far too many internal politics to deal with.

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  • Ho hum, the bigger they are the harder they fall eh? Problem is all their clients are now state owned....i know a lot of firms like CC who refused to take on many clients because they were not deemed to be worth their time. Including one who had a top 30 list of clients which comprised only big banks. Those banks are now gone, merged or state owned. Bye bye to fat cat legal fees. Hello to reality. Never mind, they can perhaps try their hand at gardening.

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  • CC can't blame their losses simply on the economic downturn and the problems their clients face. They should have operated like investment banks do and have a leaner headcount. Instead they just keep on all this deadwood, staff who are bitter about being at CC and make everyone elses like simply miserable. I know of some support staff in the litigation department (London office) who have simply done nothing for the last 2 or 3 years.

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  • In response to the previous post, there are a few good reasons why support staff in litigation departments are often short of work: litigation teams are involved in a lot less pitching than corporate/commercial and finance teams. But, for political reasons, litigation partners want the same size of fiefdom as their corporate colleagues. I know of one marketing exec at a major City firm (not CC) who was reduced to pleading with her partners for something to do, before she gave up and left. The equivalent people in other departments are often working stupid hours to get through their workloads. So this sort of problem is a management issue with its roots in the partnership structure - investment banks, I imagine, find it easier to run a leaner ship because they can allocate resources to where they are needed without worrying so much about putting backs up in the process. (Of course, this isn't to say they always get it right - bulge bracket banks as exemplars of efficiency and frugality... hm...)
    Anyway, as for CC, it will bounce back. For me, though, the really surprising fact to emerge from this article is that only 8 percent of its revenue comes from Asia. I'd always thought CC's Asian practice was stronger than that. That and the fact that, although its US practice is still shakey, it has a stronger presence in Latin America than its magic circle rivals, and had done a better job than A&O of diversifying away from finance, led me to think it had quite a coherent strategy. Now I'm less sure. Opening in Kviv - one of the more troubled countries of the CEE - when Linklaters has decided it can run its operations in the region from a small number of hubs is odd too. Perhaps its time for a more far reaching review of strategy.

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  • Why is CC's profitability so low compared to the other magic circle firms? Huge alarm for its management!

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  • I echo what someone said above about firms needing to be leaner. Anyone working in City law for the past few years knows that larger firms carry plenty of people who shouldn't be there, whether because they don't pull their weight or because they don't have the ability. Those not in these categories will shed no tears to see the lazy and the dim thrown overboard.

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  • I think it reflects the amount of support one gets from the CC partners as a client - they really just dont care if they dont think the deal is big enough they put a junior on it who has to run to the partner every time and then they send a whopping big bill. Not cool - clearly never heard of client service and when there are other choices around people are more likely to NOT go back.

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  • PEP is a 'trophy' figure of very little significance and not a real indicator of how profit is shaping up. Try some Profit Per Lawyer (PPL) calculations over a time series and the comparative results are very different. Profit is in decline in real terms and would be clearly visible were it not for the massage effect of PEP. When you drastically change the HR leverage ratios by de-equitisation the core performance characteristics are less than rosy. Time for a new business model perhaps? At least an admission that a structure requiring hundreds of directors/partners is at best anomalous would be a start.

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