Figures attained from Companies House filings have revealed the extent to which the financial crisis has hit partnership levels at mid-tier City firms.
The most striking statistic shows that one in three of all partners who have left the firms surveyed since the beginning of this financial year have come from corporate practices. Despite the downturn in the property market, almost twice as many corporate partners left their firms when compared with their colleagues in real estate teams.
In terms of corporate practices, the results largely mirror figures among the top 10 firms surveyed by The Lawyer last month. Finance departments have not been hit as badly as those in firms with bigger turnovers, although real estate has dropped off more.
Denton Wilde Sapte and SJ Berwin have seen the most partners leave their respective partnerships since the start of May, with almost half of those coming out of their corporate practices. Jomati consultant Tony Williams says: “Mid-tier corporate has suffered badly and that’s not always reflected in the stats. It’s fallen off a cliff and it’s not as if it’s coming back quickly.” The numbers do not show drops in partner headcounts on the same scale as at some magic circle firms. Clifford Chance’s total of 72 departures in the same period is more than five times higher than at any of those firms listed in the table.
As in every year, a number of the partners who have left will have retired rather than being managed out or made redundant. The list also includes those who have left the partnership but are still at the firm.
The question is whether those who leave will be replaced with fresh talent.
“I would think firms would be doing all they can to hang on to their good corporate partners,” says Dentons managing partner Howard Morris, whose firm has seen 11 lawyers, including five in corporate, leave the partnership since May. “But it may be that we’re not going to see a lot of partners made up. We don’t look at it in terms of ideal numbers; we’ll see what the quality [of candidates] is like.”
Williams agrees that the numbers may not tell the whole story, as firms across the board are having to change their make-up in the aftermath of the credit crunch.
“Some retirements may be natural, some may have been eased out. But the fact that a firm is addressing these issues isn’t necessarily a sign of weakness,” he adds. “It may be that now’s the time to do the sort of housekeeping they should have done in the past.”
CMS Cameron McKenna managing partner Duncan Weston also warns against any aggressive slashing of headcount.
“It takes a long time to build a good-quality corporate department, so you have to be careful about kneejerk reactions to get rid of people,” he insists. “The better firms are sharing the pain, but if this continues for another year we’re likely to see a step change.”