Clifford Chance is to dramatically cut its partnership as its bid to become the world’s top international law firm continues.
Clifford Chanceto cut partners in firmwide reshaping” />Clifford Chance is to dramatically scale back its partnership as its bid to become the world’s top international law firm continues amid rapidly worsening economic conditions.
In a move reminiscent of Freshfields Bruckhaus Deringer’s 2006 partnership restructure, the firm’s management has told partners that it plans to “review the shape and size” of its partnership in the coming months.
The partnership will be asked to vote on the proposal in just over a month’s time and, while no exact numbers have been discussed at this stage, both salaried and equity partners will be asked to leave the firm.
Firmwide managing partner David Childs said he is confident that partners will approve the plan, adding that he expects all those affected to have left the firm by the end of this year.
Pointing out that revenues are down across the firm, Childs admitted that the cuts are being driven partly in a bid to maintain profitability.
“Overall revenues are down and we expect that to continue,” he said. “We want to be in the right shape to be able to service our clients in the medium to long term.
“Profitability is an issue – every organisation needs to be seen to be doing well in profitability terms to be able to attract and retain talent.”
That said, Childs added that profits at the firm will certainly fall this financial year and are likely to continue falling over the next few years.
At this stage it is unclear whether any of the firm’s international offices will close in the coming year, although Childs said he could not rule that out. He also said that, while the purpose of the project is be to reduce overall partner numbers, it is possible that some people may have their lockstep position reversed.
“There may be some cases of moving partners down the equity, but it is more likely that we will ask them to leave the firm,” said Childs. “We’re a lockstep firm and [by moving people down the equity ladder] we could end up going off-lockstep by accident.”
While Clifford Chance’s partner numbers have not risen dramatically in the past few years, its lawyer headcount rose significantly between 2006 and 2008. According to The Lawyer UK 200, at the end of the 2005-06 financial year Clifford Chance had 2,432 lawyers. That number included 575 partners, of whom 382 were in the equity.
By the end of the 2007-08 financial year the total lawyer headcount had risen 16 per cent to 2,828 while partner numbers had grown 6 per cent to 613. The number of equity partners had risen 3 per cent to 395.
Clifford Chance is already in redundancy talks with its more junior lawyers with the aim of cutting its London associate headcount by up to 80 (8 January).
News of Clifford Chance’s partnership restructure comes after The Lawyer revealed that fellow magic circle firm Linklaters is overhauling its structure in a bid to become a smaller, more profitable operation (23 January).
Linklaters will slash up to 120 London lawyers and up to 150 members of support staff, in addition to numerous positions across its international network, as part of a strategy dubbed Project New World (29 January).
Unlike Clifford Chance, Linklaters did not consult partners on the move with managing partner Simon Davies and senior partner David Cheyne driving the project at the management level.