Clifford Chance is so in love with the bold move that it’s even written into the firm’s statement of values. Under the heading of ‘Ambition’, it says plainly: “Not being afraid to be the first.”
But Clifford Chance has been pretty timid recently. Time was when it would make a move and redefine the whole market – the three-way global merger, raising assistant salaries and the Canary Wharf move being three obvious examples. But for the last couple of years – reputationally damaged by the California experiment and its confidence knock-ed – Clifford Chance has simply not been in the vanguard. In other words, the Clifford Chance brand stopped being sexy.
However, the lockstep review group’s proposals to create an all-equity partnership sees the firm returning to its radical roots. At a time when most law firms are increasingly restricting access to the equity, Clifford Chance’s potential move to an all-equity partnership will put the whole debate – begun by The Lawyer a month ago – into sharp relief.
According to The Lawyer UK 100 Annual Report, there is only a handful of all-equity partnerships still going. These are: Dundas & Wilson, Freshfields Bruckhaus Deringer, Slaughter and May, Reynolds Porter Chamberlain, Wragge & Co and – working towards this model – CMS Cameron McKenna. Virtually every other firm in The Lawyer UK 100 has succumbed to the pressure of having to massage average profit figures by shrinking the number of equity partners.
The problem for firms with global ambitions is that entrance to the equity elite is defined on London terms. It means that a promising young partner in Central Europe, for example, is unlikely ever to get the nod because of the economics of the jurisdiction.
But an all-equity partnership needs elasticity in the lockstep, or it can kiss goodbye to growth. A completely inflexible lockstep doesn’t allow investment in less profitable areas of the firm – something Freshfields is already grappling with.
Under the McAuley proposals, local partners may still exist, but the vast majority of salaried partners will be subsumed into the equity through the creation of different rungs on the lockstep. Those rungs will have to be decided with reference to the local business, not to star individuals, and will be set locally.
Clifford Chance partners are among the most counter-suggestive in Europe and protest votes are second nature to them. Yet the last few years of retrenchment ought to make them back these proposals. Because for Clifford Chance, conservatism is death. The revolution has to be permanent.