Allen & Overy: yes, we are pruning the equity again

Allen & Overy (A&O) has returned to managing its equity partnership after a two-year hiatus.

The firm had stopped managing its equity partners following its 2009 firmwide redundancy ­programme.

A&O rejected claims that it was beginning to make further cuts to its partnership in response to the bleak economic forecast for the next six months, explaining that it had instead reverted to managing its equity.

“After our restructuring we stopped managing the equity for a while,” said managing partner Wim Dejonghe. “In a lockstep you have to prune the equity from time to time, usually around between 1 and 3 per cent a year. But there’s ­nothing more going on.”

In 2009 A&O completed a redundancy consultation that resulted in around 450 partners and staff losing their jobs – a process that cost the firm £46m. The consultation began in ­February 2009 in response to the global economic crisis and was designed to cut 9 per cent of partners, fee-earners and staff. The firm cut 47 partners globally, 200 fee-earners and 200 support staff, as well as de-equitising a further 35 partners.

A&O has a managed lockstep, meaning partners can move up or down the equity. Partners join the equity on 20 points and gain two points per year until reaching the 50-point plateau after 15 years – the longest equity track in the City.