Howard Kennedy to trim partnership to 'sustain profitability'
Howard Kennedy has entered into redundancy talks with six non-equity partners in its property department in an effort to reinvigorate the firm’s financial performance.
Mark Dembovsky
The move is part of an ongoing strategic review of the firm that was kick-started with the appointment of its first non-lawyer chief executive Mark Dembovsky last year (10 January 2011).
Dembovsky succeeded long-standing senior partner Trevor Newey, who retired in March after 39 years at the firm, 19 as senior partner.
The firm’s 13 equity partners agreed that a new chief executive should take steps to ensure the financial stability of the firm. The first step was a conversion to LLP status, a move aimed at encouraging transparency within the firm around it financials.
Until Dembovsky joined, the firm’s non-equity partners were not informed of its headline figures.
The firm’s property group is the firm’s largest practice and is home to 26 partners. At the end of the 2010-11 year the practice it generated approximately 43 per cent of the firm’s revenues of £29.5m, the equivalent of £12.7m.
Howard Kennedy said steps needed to be taken to ensure sustainable profitability. In a statement, it added: “Certain key areas have been ‘top heavy’ for some time.”
Dembovksy said: “ We have to be commercial about how we run our business. We need to think carefully about how we run our business next year and the year after.”
He continued: “On a personal level I’m extremely sad to be losing some excellent and long-serving lawyers who’ve been part of the fabric of Howard Kennedy.
“We need, however, to build for the future, to inject fresh blood and to focus on strengthening key areas.
“We’re on a journey and we’ll face tough decisions along the way.”
Readers' comments (7)
Anonymous | 14-Feb-2012 10:30 am
Good grief. So a cabal of 13 equity partners meets in secret to decide which of those "excellent and long-serving lawyers who’ve been part of the fabric of" the firm (and making profits for the equity over many years) should be shown the door in order to keep those 13 in the style to which they've become accustomed?
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Anonymous | 14-Feb-2012 11:18 am
Blimey, this isn't the last time that we're going to see firms of this size do this. The point is, PEP across the sector has been at exceptional levels for a while, and management teams want to keep it that way. Cost cutting only goes so far, you need to have a strong level of income. "Reinvigorate financial performance" - shouldn't that mean measures to improve growth? Anyone can sack people.
What happens in a year when this needs to take place again, do HK get rid of more partners? Reduce the equity itself? Continue to ignore the fact that the legal market is changing?
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Bobby Smith | 14-Feb-2012 11:23 am
@10.30.........welcome to the world of law firm partnerships. This example is a little unusual in that it's usually the assosciates and back office staff who suffer in order to keep the equity partners in the style they just love.
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Anonymous | 14-Feb-2012 3:04 pm
It's good to see that Dembovsky is continuing his winning work in turning around law firms... his history, formerly assisting Dawsons in becoming more "commercial"... where are they now? I trust the remaining loyal employees at HK will vote with their feet and leave the ever ageing equity to it should the economy ever improve!
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Anonymous | 16-Feb-2012 12:23 pm
A classic example of equity partners taking full advantage of the current economic climate to line their own pockets!
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Anonymous | 16-Feb-2012 12:43 pm
Well Mark Dembrovsky and the equity partners have shown their true colours. Making redundancies purely to replace these lawyers with cheaper "fresh blood" to boost their own profits. I hope they sleep well in their comfy beds whilst these "excellent and long-serving" lawyers worry about whether they can pay the next month's mortgage. Shame on you.
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Anonymous | 17-Feb-2012 8:05 pm
These six excellent partners and the one other senior associate affected will very soon find themselves thankful that they are not on Dembovsky's "journey" and grateful that they are pursuing their careers elsewhere. Ditto shame on the equity partners.
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