The victor in the race to become Clifford Chance’s next London managing partner could have a short-lived reign, if plans being drawn up by global chief David Childs are actioned.
Childs, whose term as firmwide managing partner comes to an end in May next year, is widely tipped to seek a further term in office. If he does stand no one is thought likely to challenge him.
One of the key planks of Childs’ election campaign is expected to be a vow to tighten up firm management – something he hinted at when the firm announced its redundancy programme at the start of this year. Countless office and practice head roles could be cut as part of the plan.
As one source at the firm says: “All the small offices have office managing partners and those people are perhaps managing just seven partners but don’t do any fee-earning because they’re in management. That will be looked at.”
It is also thought tricky that partners within each office report to a local practice head and local managing partner as well as a global practice head and, ultimately, Childs himself.
Childs’ main reason for wanting to cut out as many layers of management as possible are well-known within the firm: he wants to be able to push through vital decisions without endless discussion or opposition.
At face value this could seem like the manifesto of an egomaniac but, as partners at the firm will attest, in reality Childs is simply learning from the firm’s recent mistakes. Sources at the firm say that Childs, who is widely regarded as an excellent financial manager, had wanted to restructure the firm long before the move was finally sanctioned internally at the beginning of this year.
Childs, concerned that 70 per cent of the firm’s business was exposed to the financial services sector and predicting further economic turmoil, had first mooted large-scale redundancies at the time Northern Rock collapsed. He could not get management’s approval for the plan.
This explains why, after the firm had one of its worst years in recent memory, with average profit per equity partner dropping from £1.17m to £733,000 in 2008-09, Childs still has the full confidence of the firm. As such, the partnership is almost certain to back his future proposals.
Which means London finance head Mark Stewart and London capital markets chief David Bickerton, who are so far the only names in the frame vying to become the firm’s next City chief, could be chasing an empty role.
Then again, as London is still by far the firm’s biggest office, and as such is one of the few that could justify having a local managing partner, Stewart and Bickerton could be looking at the job as a means of holding on to a management position once their London practice head roles have been eliminated.
Certainly Stewart has made a compelling argument for keeping the London managing partner role, while highlighting that managers in such positions cannot add as much value to the firm as those partners who are full-time fee-earners.
Sources at the firm say Stewart emailed the partnership before the nomination process, saying that while he was keen to stand he did not view the job as a full-time position, believing that the successful candidate would have to commit a maximum of three days a week to the role.
However, as those three days would be spread across the full working week and would encroach on the two days devoted to fee-earning, Stewart has offered to take a reduction in lockstep points if he wins the vote.
As a plateau partner Stewart would currently be on 100 lockstep points, with each point being worth £8,700 at the end of the last financial year (early indications are that the figure will have risen to £11,000 at the half-year point). It is unclear how many points Stewart is proposing to drop, although sources suggest that he may actually retire from the firm if he is not successful.
With nominations for the post opening last Wednesday (14 October), it is not yet certain whose names will go forward for the vote, but the feeling is that Stewart’s attitude towards his own remuneration, should he be successful, has won him many supporters within the firm.
As one partner says: “This has made it hard for anyone to stand against him.”