A New Year, a new management headache

It’s a story to put fear into the heart of any law firm management team. After two years of re-engineering, Linklaters probably thought its most turbulent times were over. But it’s now facing a move which can only be described as bold, from four former partners to dissolve the entire global partnership.

The Linklaters management wheeled in Tony Grabiner and Laurence Rabinowitz to reassure its partners that the claim is groundless, but it hasn’t gone away. When a partnership dispute turns into a point of principle, things get ugly.

Linklaters’ central management has done plenty of partner-chopping in the UK, but not in Germany; most of the firm’s exits there were deliberately accomplished prior to Oppenhoff & Rädler’s merger with Linklaters. Up until now it’s been a relatively civilised process on the Continent.

So, when Linklaters’ international board blithely approved a new restructuring programme in Germany, it would have had no inkling that a group of partners were not going to go quietly, and certainly not exercise their rights to a full partnership vote. The board’s decision to de-equitise the quartet was ratified by the global partnership, but as one partner puts it: “There was a lot of angst.”

According to one source, the Linklaters management has, on occasion, characterised the refuseniks’ stance as trying to maximise the amount of compensation available to them. The German partners have claimed that certain sections of the firm have circulated false rumours that the four were demanding up to £3m each. So at the moment it’s a pretty tense stand-off, and there is serious unease on the part of many partners about how their erstwhile colleagues have been treated.

Linklaters, it has to be said, is doing itself no favours here. When someone tries to deflect questions, or tries to score rhetorical points without answering the fundamental issues – well, that’s the worst sort of lawyerly behaviour, whether you’re dealing with a client, a fellow partner or even a journalist. Linklaters originally tried to parry our questions by dismissing the very idea that a dissolution was possible – but they certainly didn’t reject that idea back in October when they wheeled out Tony Grabiner for an opinion.

Virtually any firm you can mention has had to de-equitise partners over the past few years – the most recent and spectacular being Lovells. Every managing partner will immediately hope that this won’t launch a spate of copycat actions. That would make it a very unhappy new year for an awful lot of law firms.