Linklaters’ hard line transforms magic circle
A horrible period for Linklaters resulted in a transformation within the magic circle.
The story really began back in 2002, when The Lawyer revealed that Linklaters was going to focus on corporate and finance work and downgrade non-core areas. Even real estate and litigation were to be ‘realigned’ around servicing key global clients.
By March 2003 managing partner Tony Angel, who recognised that the firm had lost its focus, moved to de-equitise partners for the first time in the firm’s history. The partners affected came from the real estate and construction departments.
Some cuts were driven by underperformance, but the underlying reason was strategic. From mid-2002 to the end of 2003, Linklaters said goodbye to 24 partners.
The restructure affected staff at all levels. Associates were given the axe and the three-month litigation ‘short-seat’ was abolished, with trainees farmed out to an external provider.
For two years Linklaters was not a happy place to work. Even senior UK corporate partners revolted against the suggestion that the firm go off-lockstep to attract US laterals.
But the results vindicated Angel’s hardline strategy. Average profit per equity partner rose from £650,000 to £734,000 in 2003, and Linklaters now leads the magic circle of UK global law firms.
The Linklaters restructuring was mimicked in turn by the rest of the magic circle. Allen & Overy chose a quieter method of weeding out partners; Clifford Chance took an axe to costs and took a hard line on underperformance; and Freshfield Bruckhaus Deringer’s ‘Size and Shape’ restructure and pensions reform in 2006-07 saw a total of 100 partners leave the equity.
The result? By 2007 every firm in the magic circle had equity partners on more than £1m a year. Even taking into account the slump in the dollar, the global UK firms were competing with US firms on their own financial terms. Much of that was due to Angel.
Addleshaw Booth & Co, Theodore Goddard and the private detectives
After a decade of failed merger talks with a variety of firms, Theodore Goddard finally tied the knot with Addleshaw Booth in May.
Theodore Goddard had not been in a stable condition for the previous year since the failure of its talks with Salans. A number of partners had jumped ship for Salans, and rumours that it had drawn up a shortlist of merger partners led to the firm hiring private detectives to find the source of the leaks. It followed this up with the splendid idea of demanding that all partners produce itemised bills for home and personal mobiles (this was not popular, to say the least).
Although the firms scrapped the date of 31 March for the merger vote to avoid announcing the result on April Fools’ Day, the auspices were initially not encouraging for its first year of existence. Each firm had had to cope with a profit slump, it lost its place on the Barclays panel and by the end of the year came the news of partner redundancies. And yet, after a bumpy start, Addleshaw Goddard – now run very much as an Addleshaws takeover – became one of the most solid performers in the mid-tier.
US firm turns its back on London
Buchanan Ingersoll closed in London after three years. A spokesperson for the firm demonstrated the art of speaking the achingly obvious, when he said: “We announced more than a year ago that we were going to restructure the London office, and now we’ve completed that process.”
Another strategic downsizing
DJ Freeman was rent asunder as the litigation and insurance practices rebranded as Kendall Freeman and the property and media departments decamped to Olswang.
KLegal divorced from KPMG in the wake of the regulatory pressures of Sarbanes-Oxley, after £10m of funding. The UK arm was reborn as McGrigor Donald.
What goes up must come down
In the downturn of 2003 Clifford Chance cut newly-qualified salaries from £50,000 to £48,000. It triggered similar moves at Eversheds, Hammonds, Masons and Osborne Clarke.
Mergers that didn’t happen
– Ashurst and Fried Frank
– Pinsents and Nicholson Graham & Jones
– Simmons and Pillsbury Winthrop
Excellent money-spinning wheeze
Hammonds managed to make some extra cash from clients by setting up national-rate 0870 numbers for its switchboard and staff direct lines.
It was paid commission for receiving calls
from service provider Kingston Communications. Hammonds reckoned it could make up to £50,000 in a year from switching to the new numbers.
We love barristers so much we want our own
Herbert Smith was revealed to be planning its own barristers’ chambers. It would take a year, but it eventually landed Murray Rosen QC and Ian Gatt QC in 2005.
Michael Webster, Webster Dixon
In 2003 Michael Webster emerged as one of an influential new generation of spokespeople for diversity in the legal profession.
His co-leadership of commercial law firm Webster Dixon earned him and his partner Dawn Dixon an entry in The Lawyer’s Hot 100 at the end of the year. But away from his day job representing commercial clients in the small and medium enterprise sector, Webster has led much of the debate around ethnic minority access to the profession.
In 2003 he helped found the Black Solicitors’ Network – the first ethnic minority group to gain Law Society recognition – which has gone on to set up mentoring and training workshops for young people wanting to enter the law, as well as networking sessions for black solicitors.
The network’s campaign to force City firms to publish their diversity statistics has been partly responsible for greater transparency within commercial law firms.
