Last Friday, Clifford Chance’s management committee gathered for its regular monthly meeting. I’m guessing the mood was chastened. The previous day the firm had announced the first redundancy programme in the magic circle (see story). By this I mean formal redundancy programme, since there’s plenty of anecotal evidence that Clifford Chance’s peers are finding other ways of reducing headcounts.
And then there’s profitability, which despite everything is still the benchmark by which partners measure success. As we reveal today, Clifford Chance partners are being faced with the prospect that the top of lockstep will dip below £1m for the first time since 2006 (see story).
Now, you and I know that, given the current economic circumstances, any Clifford Chance partner who is genuinely outraged at the thought of earning less than a million a year ought to be horsewhipped – preferably in front of the associates facing redundancy, as well as a smattering of former Woolworths workers, perhaps.
But that is to forget the complex interplay of ambition, competitiveness and ego that drives the magic circle. Not everything in the world has changed after Lehman, and the last thing Clifford Chance wants is to be ejected from the club.
The next question is what Clifford Chance is going to do with its non-equity partners. It has a considerably bigger pool of them than other magic circle firms, and in a downturn non-equity partners are a serious cost.
Nevertheless, David Childs says the firm is not undertaking a headcount review of the partnership. This may stick in the craw of the 880 London associates currently in consultation; however, the signs are that the firm’s management will apply stricter performance reviews to the partners. Let’s hope they’ve paid off the mortgage.
The redundancy process at the globe’s biggest law firm will be scrutinised closely. The amount of interest this story has generated, both on TheLawyer.com and in the national media, makes further examination inevitable. Clifford Chance had better accept the fact that the world is suddenly interested in it again. Even if it’s not for the happiest of reasons.