Exclusive: Linklaters to axe up to 70 partners in massive shake-up
Linklaters to axe up to 70 partners in massive shake-up" class="inline_image inline_image_left" src="/pictures/web/images/15828_links-office.jpg" />Linklaters’ top management is to drastically overhaul the firm’s structure, slashing up to 70 partners and 10 per cent of associates in a bid to become a smaller, more profitable operation.
The programme, understood to be called Linklaters New World, will also see redundancies among support staff. The firm’s offices in Western Europe are thought to be most vulnerable to cuts.
The plans are in their early stages, with managing partner Simon Davies and senior partner David Cheyne still working out the details.
A source close to the firm said: “We’re in a very difficult market and the rational thing is to ensure things are on a firm financial footing. There’s a high degree of consensus [within Linklaters]. I’ve not seen any dissent or sense of unhappiness about this.”
The source added: “The approach is to ensure that the firm remains the market leader and do whatever it takes. You’re not going to maintain profitability at boom levels but you can maintain relative profitability. It’s a directed business. The job of the management of this business is to manage the f***ing thing.”
But some observers of the programme said that it could endanger the collegiate culture of the partnership.
One source said: “The culture of the firm is really under threat. The intention is to spend a lot of money on this. It’s a very expensive move. I think they’ll be fairly generous with their severance pay. They’ll try to do this very soon and they want to do it in one shot.”
Another source said that the firm could start moving on the scheme as soon as mid-February.
The source added: “The programme is more than just a way of dealing with the economic crisis, it’s an opportunistic effort by the senior management to reshape the firm. It’s a big risk.”
Last year Linklaters started slashing its client base in an attempt to reduce conflicts and focus its business on large global entities.
At the time it was understood that the firm had trimmed its client base from 11,000 to 6,000, with the expectation that the list will number 3,000 by the time the scheme ends. The initiative saw the firm get rid of small clients that could conflict it out of acting for larger players.
Linklaters declined to comment.
For more on this story, see the Freshfields-Linklaters arms race and the leader.
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Readers' comments (55)
Anonymous | 23-Jan-2009 1:14 pm
Here we go again...
Linklaters axing people? And the news is....? Can't say I'm that surprised.
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Anon. | 23-Jan-2009 1:16 pm
Not surprised
About time- the ecm group is far too large and specialised. I suspect the real niche practice areas will be hammered and those who are a bit more generalist will thrive. Slaughters is the example of just how well firms can do in this climate
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Jobby McGhee | 23-Jan-2009 1:17 pm
Poor associates
So the partners think that it's acceptable to sack people to get their profits up to £2m? In a recession? They'll be wanting a government bail out next.
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Links | 23-Jan-2009 1:18 pm
Ha!
Thought they'd been a bit quite recently...
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Anonymous | 23-Jan-2009 1:28 pm
Silence from within LL
Amazing that Linklaters employees should first learn about the planned redundancies via the Lawyer rather than direcly from the partnership. Poor show.
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Anonymous | 23-Jan-2009 1:45 pm
Culture
I like this sentence:
"But some observers of the programme said that it could endanger the collegiate culture of the partnership."
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Fatigued | 23-Jan-2009 1:51 pm
When does it stop?
You have to wonder at what point Linklaters partners - even those who are performing - get bored with all that grief. And for what? A few dollars more? A smile from Cheyne and Davies in the corridor? Certainly not the reaction at cocktail parties from peers in other firms. That has been stuck for a while at "pity". It will now turn into "disgust".
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Anonymous | 23-Jan-2009 2:06 pm
Count the numbers
A cut of 70 partners would equate (roughly) to around 18-20% of the partnership if you assume partners and members are the approx the in the firm's LLP accounts. Assuming that all partners are equity partners, then using the firm's PEP figure for 2007/8 it amounts to around £70m of partner profits. The LLP accounts show profits before members expenses and discretionary division of around £435m. While there is plenty of room to argue some of the accounting semantics it is hard to resist the conclusion that there is a risk of a serious collapse in profits if steps are not taken.
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PM Dawn | 23-Jan-2009 2:13 pm
This could be interesting...
The magic circle are the only firms to rival the Manhattan elite, but have always had lower PEP. A move that increases profitability to NY levels could be really interesting, removing one of the last major cultural distinctions between the two. If pulled off successfully, this could be the dawning of a new era...
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Anonymous | 23-Jan-2009 2:19 pm
Links - your lipstick is a tad smudged...
Linklaters could have given its sacked partners and associates the dignity of taking this step soberly and regretfully, rather than dressing it up in cheap, tacky and transparent management-speak as "Linklaters New World". As artfully put by the incumbent President "Put lipstick on a pig - it's still a pig".
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