Assistant attrition grinds on firms
Many partners at the top of the equity in City firms wince when the phrase “work/life balance” is mentioned. They might even add the timeless phrase, “It wasn’t like that in my day” to show their displeasure at the moaning of underlings.
But the truth is that the legal market is not like it was in the 1970s and 1980s, when most of the oldest and most senior partners still working cut their teeth. For many assistants, making partner after a 10-year trawl up the ladder is the last thing they want. They would rather get a few years of training and experience under their belts and then head off in-house, or into industry, or into their own business that they are now well qualified to establish.
For others, the partnership opportunities are simply not there (see “Wragge & Co rejigs senior management”, right).
Equally, the traditional structure of the law firm is under pressure, and not just from Clementi. A new breed of firm is springing up, such as DR Law, Forum Law or Lawyers Direct, where lawyers may act as freelance consultants, working as and when they want.
It is in this context that one of the most pressing issues facing law firm management was pinpointed last month. In November, The Lawyer published exclusive and groundbreaking research carried out by its sister title Lawyer 2B. It showed Denton Wilde Sapte (DWS) had the worst assistant attrition rate among the top-50 firms. Almost a third of its junior lawyers – 32.07 per cent – have left the firm during the last financial year.
True, those figures also need to be put into context. DWS has suffered major departures from its technology, media and telecoms, and insurance departments. It also may be true that, as DWS pointed out to The Lawyer, the firms that did not report figures might have done so for a reason.
Nevertheless, for DWS, as for any firm (Ashurst, which had an assistant turnover rate of 26 per cent, Allen & Overy and SJ Berwin, which each had an attrition rate of 25 per cent, have nothing to crow about), hanging on to its brightest stars is at or near the top of the managers’ agendas.
Half-year figures boost confidence
The M&A boom that has benefited a number of City firms recently has helped boost confidence that the financial results for 2005- 06 will show a return to form. After all, there is not much management can do with a firm if the money is not there.
But The Lawyer’s half-year figures roundup suggested that the signs of a pick-up in deal activity has something more tangible than hot air about it.
Pinsent Masons led the way with a resounding, and much-needed, return to form. The firm posted a revenue hike of 12 per cent but is on track to see average profit per equity partner (PEP) increase by 40 per cent to £328,000.
Hammonds is another national firm that looks set to make a recovery. Half-year growth was up 8 per cent, while PEP was on track to beat last year’s £204,000 (though frankly, failing to do so would virtually amount to a suicide note).
Simmons & Simmons looks set to benefit from the boom, with its role advising Telefonica on its £17bn O2 acquisition the cherry on the cake. Its rocketing PEP is set to hit £450,000 next year.
But in the end Clifford Chance took the prize for the most ambitious predictions, with half-year revenue up at around £500m and PEP looking likely to reach a stunning £850,000 next year. These figures represent a 10 per cent increase on the previous year’s performance and keep the firm on track to beat its record-breaking year in 2001.
It was not plain sailing for every firm, however. The management at Fresh-fields Bruckhaus Deringer, already up to its eyes in senior partner elections and about to lose chief executive Hugh Crisp, also has to deal with a half-year return of some £380m that, proportionately, lags behind its magic-circle rivals’ results.
Wragge & Co rejigs senior management
The issue of assistant attrition rates was highlighted again last month at Wragge & Co. A Wragges insider told The Lawyer that the firm had been “haemorrhaging” associates during the past year.
The revelation came as The Lawyer reported the Birmingham-based firm’s shake-up of its senior management, which included a reshuffling of its corporate practice.
“Associates are leaving in droves because it’s just so difficult to be made partner there,” the source said. “This is going to continue to have a flow-on effect on the corporate department as talented associates leave to take up better job offers at other firms.”
While the management restructure was touted as a bid to boost the corporate practice, Wragge’s Ian Met-calfe denied that the focus of the shake-up was actually the corporate department itself.
“It was pure coincidence that the movements came from the corporate department,” he claims. “It was about putting the right people in the right place and moving forward.”
Wragges’ corporate practice experienced a steady decline between 2002 and 2004: in 2002 there were 21 corporate partners billing £11.1m out of a total £77.8m turnover; in 2003, the practice had 20 partners who generated £10.3m from a total turnover of £79.2m; and in 2004 there were 21 partners earning £9.5m out of a turnover of £79.3m.
This year the figures improved, with 18 partners generating £10.3m from a total turnover of £88.4m.
Even more tellingly, during the past 12 months no senior associates were made partners, despite the departure of Peter McLintock to Hammonds and Nick Smith to Nomura.
Management changes also included losing corporate rainmaker Ian Metcalfe to the managing partner’s job. Metcalfe is taking over from Richard Haywood, who is to lead Wragges’ new international business development team.
David Vaughan, meanwhile, takes over from Jeremy Millington as the group leader for corporate.
Lovells axes its global executive
The axe fell on Lovells central management last month when the City firm slashed its international executive and reconfigured its international operations committee (IOC).
The executive, chaired by managing partner David Harris, was reduced from 14 to 11 members to facilitate more effective strategic decision-making. Meanwhile, the IOC, which is chaired by chief operating officer Nick Cray, has taken on responsibilities previously handled by the executive.
Harris told The Lawyer his aim was to free up Lovells’ international executive so that it focused more on business strategy and was, “in the best position to drive the firm’s development over the next few years”.
Profits, of course, are always better if they are bigger – especially in the case of Lovells – but when it comes to management small is often beautiful.