US firm Gibson Dunn & Crutcher is set to overhaul its partnership and fee-earner recruitment process following the decision to increase the firm’s global leverage to three lawyers for every partner.
It is understood that the firm will use a mixture of managed partner exits and increased recruitment of fee-earners to achieve its leverage target. Management declined to elaborate on the process.
“The only real reason to increase leverage is to increase profit,” a Gibson Dunn partner told The Lawyer.
Despite a successful 2004, the firm has unveiled plans to increase leverage from a global average of 1:2 to 1:3 within the next few years. It reported a 10.2 per cent increase in average profit per equity partner to $1.5m (£850,000) and a 7.4 per cent increase in gross revenue to $693m (£392m) at the end of the 2004 financial year.
The firm would have to employ a further 250 fee-earners to achieve its leverage aim if utilising the recruitment track alone, or alternatively reduce its partnership by about 80 partners.
Gibson Dunn had 245 partners supported by 500 other fee-earners at the end of its 2004 fiscal year.
Observers have, however, predicted that the firm will face recruitment difficulties because of its strict candidate requirements.
The leverage target will affect the London office, which has 13 partners supported by 24 fee-earners. The local team helped to bring in £26m in gross revenue for 2004, with the office on track to increase revenue to £30m for 2005.
Despite the planned increase in leverage, Gibson Dunn will still boast a much lower figure than many of its UK competitors.
Walker Morris has the highest leverage in The Lawyer UK 100, with 8.6 fee-earners for each partner, while the magic circle firms have an average leverage of 1:4.6.