Fatcat:Tackling the lure of the top five
15 February 1999
Senior partners of the top five staunchly defend themselves against accusations that they are poaching key players from the firms in the tier below them. "Partners are ruddy well queueing round the block to get in. We're having to turn them away," scoffed one senior partner recently after a rather heavy dinner - unattributable, of course.
The firms haemorrhaging all these partners are getting increasingly concerned about how to keep them. Simmons & Simmons introduced merit-related profit sharing in an attempt to keep partners happy. It didn't though. The defections continued.
Other firms have gone more touchy-feely - the London office of Weil Gotshal & Manges was founded by cuddly managing partner Maurice Allen - who five years ago found that great legal factory Clifford Chance was far too impersonal an environment and left it to travel the world. Allen gathered around him a lot of former CC colleagues, not to mention senior assistants from other firms such as Linklaters, Freshfields and Allen & Overy.
The top five, and jealous rival US London offices, love to rubbish Weil Gotshal. For years there were rumours that the top people were leaving to go back to where they came from. But the rumours weren't true - until last week that is. Weil Gotshal is losing Sean Pierce - one of the original senior assistants who left Linklaters in 1995 to join Allen - who's going off to seek fresher fields at, er, Freshfields.
So even "cuddly" didn't work for Pierce.
A third option has been to focus on profits - boost the bottom line, pull the firm up the profitability league tables, keep investment at a minimum, don't make up too many equity partners. (Hammond Suddards comes to mind.) However, unless the strategy for attacking the market outside the firm is sound, it is doubtful if even this is the answer.
Partners like to feel they are with a winning firm. They want jam today, but if partners suspect that the cost of getting jam today will be a thin gruel in a few year's time, they will get itchy feet. The truth is, it is the shape of the market that is eroding partners' loyalty. The mid-tier firms are being squeezed between the wallets of the top five, the menace of the specialists, and US firms. Most of the yanks offer more money, but, more importantly, they offer the excitement of being in control of your own destiny, with a small but luxurious office in the City, and your US mentors 2,000 miles away.
Americans like to throw money at things. Many US firms are dabbling, and will withdraw their fat toes when the English water gets too cold. But most of the UK partners working for them in London have factored this into their equations. They are hoping that by the time the yanks go home, their own CVs will look impressive enough to bring them to the front of the queue at the doors of the top UK five.
Tinkering with remuneration structures is only going to unsettle people, without facing the core problem. The key question is, can your firm be at the top in all the markets it currently works in? For most the answer is "no". "Focus" is the horrible new buzzword. But there is a reason for the buzz.
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