Your correspondent, although probably not quite right in saying that the Leveraged Financiers carried the firm for years, is doubtless on the right track.
For many years the Lev Fin Group is believed to have substantially out- performed, and to have been year in/year out a major contributor to the partnership pot after meeting its own costs and covering its own partners' profit shares - sometimes, it has been said, contributing in terms of profit double the profit share of its partners- as well as delivering substantial work into the European network.
However after Tony Keal and Stephen Gillespie left the time was ripe to settle old scores and take over territory. It is no coincidence that the general Banking group in London (where Banking management is located) is believed to be losing only 2 partners despite being around twice the size of the Lev Fin Group (and for several years having colonised ever greater amounts of leveraged finance work, which on occasions, in the view of some , was not executed to a comparable standard).
The 'spin' is fascinating, in that whilst the London Lev Fin Group may comprise 12 partners it is believed that only 8 of them actually do Leveraged Finance, so A&O has chopped over 60% of its specialised London partners at a time when others in the sector, especially on the Borrower side, are extremely busy (this says much about the wider firm's overall failure to attract and retain borrower side work).
It is also believed that the Lev Fin Group has more or less washed its face in the current downturn, which is likely more than can be said for many areas of A&O in London over the previous 10 or so boom years.
So the cutbacks do appear to be politically focussed. They are certainly very short sighted, driven more by score settling and perceptions of who can be axed to keep up the pep without risk of management losing a partnership vote, than by a cool headed appraisal of the likely direction of Lev Fin business.
Major PE firms are not simply going to shut up shop and disappear. Certainly there is much less debt available and hence they are for now pursuing alternative investment strategies (most of which require specialist Lev Fin advice from senior people) such as partnering with corporates, buying minority stakes, pure equity deals for assets carrying substantial debt already and negotiating a roll-over of that debt, debt purchases, 'loan to own' , infra-structure acquisitions etc.
The sector will continue to exist and will continue to require specialised Lev Fin skills,and of course there is substantial work for both Bank side and Borrower side lawyers with the existing PE portfolio companies, many of which will be having a tough time.
All-in all a sad indictment of the firm and an extremely short termist knee jerk reaction which ultimately will prove to be a major error, as well as a quite appalling example of fratricide. CC, Links, FBD and a number of US firms will be looking to the future with relish.