Linklaters‘ managing partner Tony Angel was quoted in the press last week as saying that the magic circle firm’s profits would be “above 10 per cent [up] on last year”.
This earlier than usual indication for 2004-05 profits has had the whole of the City talking – 10 per cent is a bullish figure in a very average year.
But when Angel returns from skiing in Colorado this week, he will fly back into a storm. The firm is now trying to back-pedal dramatically, saying that improvement on last year could be only marginal. What once seemed a simple story is mired in a campaign of mis-information.
What is clear is that partners were warned at a lunch almost three weeks ago that Linklaters had a flat January and February, with billings no better than in 2004. Management announced the firm would definitely not hit its target of £40,000 a point, or around £1m for plateau partners. Last year, partners earned around £34,000 a point – taking home about £33,000 after deductions for items such as overseas’ partners allowances. But partners are still under the impression that the firm is on track for between £37,000 and £38,000 a point this year, around 10 per cent up on 2004.
Angel’s abrasive management style will assure close scrutiny from both hawks and doves if he doesn’t deliver real results. Having taken a tough line on partner de-equitisations in the past 18 months, he will find himself caught between two stools. On the side of the hawks, one partner commented: “He’ll be in deep s*** if he says we’re flat.”
Just like Clifford Chance and, to a lesser extent, Allen & Overy and Freshfields, nobody would deny that Linklaters must increase its profits or risk losing more partners to US raiders. But the doves complain of the damage caused to a traditionally tight partnership culture by the most radical partner cull undertaken by any major firm. The eviction of a group of German partners caused serious consternation last December when the issue was put to a firmwide partnership vote. There was some sympathy for the position of the ousted partners, even after they took the remarkable step of threatening to dissolve the global partnership. Whether or not it was the case in law, the former Oppenhoff partners believed the spirit of their pre-merger agreement with Linklaters protected them from de-equitisation until 2006.
Angel will be a marked man if he hasn’t delivered a significant improvement.