Eversheds culls equity partners to hike profits

Eversheds is slicing an estimated 10 per cent of equity partners in an attempt to boost profitability.

The figure represents 20 partners, of whom 10 will be taken out of equity and will drop down to fixed-share status, whereby a partner is effectively still self-employed but receives a fixed salary. The remainder will be asked either to retire or leave the firm.

Commenting on the move, managing partner David Ansbro says: “On the makeup of the partnership, it was always on the agenda to review equity, fixed-share and salaried partnership.”

He confirms that the firm will be looking at the removal of 20 partners from sharing profits, which reached £380,000 per partner for the top of equity, according to The Lawyer 100 Survey 2000. Those at the bottom of equity earned £120,000.

Ansbro says that the move to reduce its 201 equity partners is not connected to the firm's review of its national presence, following its migration to full profit-sharing between offices last year (The Lawyer, 14 February). “We're always looking at the structure becoming a single partnership,” he says. “And taking 20 partners out of 200-plus is a very small percentage.”

If 10 partners are taken out of the top of equity, it would free up £3.8m, based on last year's figure which, if divided equally among the remaining partnership, would give a payrise of about £19,000 each.

One source says: “There's been lots of conflict between the younger partners [and the seniority]. The younger partners want the historical corporate structure to be more cohesive rather than being determined regionally.

“David [Ansbro] is well regarded in a management and administrative role and will do this as nicely as it can be done.”

A source says that while there is a view that the partnership has become top-heavy, with room to be made for the younger partners, there has been a change in culture after new partnership deeds were introduced in May last year.

Under these covenants, lawyers can be removed from the partnership without a full partnership vote, while they can be moved up as well as down in equity.

Ansbro says: “If you look at the nature of the business, a lot of the partners are over 50 and are clearly moving into a position where they should be thinking about retiring.”

It is not clear where the cuts will be made, but it is expected that the changes will take place on a national scale.

This is the second time Eversheds has reduced its equity partners – three years ago cuts were made in its Nottingham and Norwich offices.

It was around this time that Eversheds chairman Keith James announced the five-year plan outlining the streamlining of the management structure and a change in profit sharing (The Lawyer, 29 April 1997).

In September 1999 the firm decided to close in Middlesbrough, moving its three partners to the Newcastle office.