Streamlined firms emerge from ashes of annus horribilis
30 November 2009 | By Luke McLeod-Roberts
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A year after the eye of the storm, The Lawyer can reveal how the top UK firms have redrawn their partnerships
Just over a year after Lehman Brothers collapsed, a picture has emerged of how the partnerships of the UK’s top 10 firms have been reshaped.
Of the group of City firms surveyed, Clifford Chance has seen the greatest number of departures: since 1 May 62 partners have left the firm, according to filings made with Companies House.
Although a number of these individuals may have retired or left for personal reasons, some left as a result of a major restructuring programme, which saw around 130 people move on.
A senior Clifford Chance source said that the firm was in better shape as a result.
“We believe the measures we took will take the firm to the right size going forward,” he said. “London activity levels are very much improved from the position we were at a year ago - for example in corporate we’re currently advising Kraft on the Cadbury bid and our restructuring practice is extremely busy, but we can’t pretend that we’re as busy across the firm as we’d like to be.”
The 72 LLP member resignation round at Clifford Chance was over three times the size of Linklaters’ 23 and more than at Allen & Overy (A&O). This was despite both competitors carrying out much larger restructuring programmes than Clifford Chance. Linklaters targeted 270 jobs in a programme that is believed to be ongoing, while A&O lost around 450 staff, 247 based in the UK.
The total number of partner resignations at Freshfields Bruckhaus Deringer - the only magic circle firm not to have had a substantial redundancy programme - was much lower at 14.
Across the magic circle the corporate and finance practices have seen the most reductions, with real estate departments less affected.
However, a spokesperson for Clifford Chance argued that it was too early to conclude which practices will emerge the leanest in terms of partner numbers.
“We expect a 15 per cent reduction in the size of the partnership over the course of the 2009-10 financial year,” she said. “Our anticipation is that it will be pretty much across the board in terms of practice areas.”
Another factor determining which practice areas have been the worst hit is the prior size of the group in question. At Eversheds fewer partners have resigned from real estate than from finance (nine in the former, three in the latter), for example.
Eversheds managing partner Lee Ranson said: “We had the largest real estate practice in Europe. In terms of the wider impact on real estate, it doesn’t surprise me that they’re focused in that area. Finance stayed relatively busy; a central part of the strategic plan has been to increase critical mass there - we’re still looking at recruiting there.”
A number of those who have resigned from the UK LLPs have remained partners at the firms in questions, but have moved to other jurisdictions. This was the case for Lovells private equity partner Stephanie Keen, who moved to Singapore, and Herbert Smith disputes partner Stuart Paterson, who relocated to Dubai. They have not been included.
Both these partners are thought to have moved for strategic reasons, but Addleshaw Goddard LLP expert Richard Linsell said he expected the number of partners resigning from UK LLPs to increase in the coming months. “With the 50 per cent tax-rate changes coming in April, we’re expecting to see more requests from partners looking to work abroad,” he said.
The data also points to a gap between the number of partners who have resigned and the number of reported job losses since the start of the downturn.
Dawsons Solicitors head of employment Jo Keddie said: “Through the growing number of partners for whom we’ve acted over the past 12 months, it’s clear that a number of magic circle and mid-sized firms are continuing to consider the removal of equity and fixed-share partners.
“And a number of firms don’t put these figures in the public domain. Invariably it’s the case that the departure terms are kept confidential between the parties. Firms will continue to manage partners out. I think it’s unlikely that the tide will turn before the end of the financial year.”
Additional reporting by Gavriel Hollander and James Swift