Linklaters ditches CEE to follow fashionable Eemena

<a class=Linklaters ditches CEE to follow fashionable Eemena” />The ;legal ;industry ;may ;be traditional, but it is not immune to changing fashions.

When Linklaters decided last week to axe its four offices in Bratislava, Bucharest, Budapest and Prague, and to ramp up its focus in places like Ukraine and Kazakhstan, the firm essentially swapped some out-of-date accessories for the latest look.

The four Central and Eastern European (CEE) offices will split off from Linklaters in November, eight years after they launched, forming a single, eight-partner independent practice that will maintain a best friends relationship with the magic circle firm. Jason Mogg, currently Linklaters’ CEE head, will lead the new firm.

London capital markets partner Nick Eastwell will head the combined Emerging Europe, Middle East and North Africa (Eemena) group – replacing offices with foreign desks in London. Two partners will be assigned to each jurisdiction in the Eemena region, ;starting ;with ;Ukraine, Kazakhstan, Turkey and Saudi Arabia. The firm has not ruled out offices in those regions, but for now will be sticking to virtual sites.

“We’ve been looking at this for a while,” says Eastwell. “The credit crunch and its impact in places like the UK and US has got a lot of our major clients focusing on this geographical region. We do a huge amount of business in these areas, but we haven’t focused on ramping it up until now.

“When you look at a huge region like this, you’ve got to focus on the fastest-growing markets and the biggest countries.”

Eastwell is going through the process of assigning countries on the basis of partners’ experience and specialisms. So far he has picked former Prague managing partner Francis Kucera to lead the Ukraine desk. Kucera has represented the Ukrainian government on a series of bond issues in the past.

The firm fervently denies that profitability entered into the decision to scrap the offices. Eastwell claims that three of the four offices hit high profitability targets, saying: “These offices were historically extremely profitable and the decision we made has nothing at all to do with profitability. You can quote me on that.”

But profitability is surely a major factor in any decision a firm makes, be it how many biscuits to buy for the meeting room or whether to drop offices. Linklaters is no different. The firm has seen the larger markets of Ukraine, Kazakhstan and Turkey as more active in the long term, and therefore more profitable. Linklaters will have eight fewer partners to worry about when it comes to sharing out the profits, but will still be able to send institutional clients, such as JPMorgan and Vodafone, to the same relationship lawyers as in the past.

Linklaters’ decision to cut offices in favour of virtual practices shows a complete change of direction for a magic circle firm. It signals that the turn of the century dream to cover every inch of the globe with Linklaters lawyers has been killed by the harsh reality of managing such a complex operation.

“You just can’t devote the right amount of management time to make sure that focus and quality of service is kept up in every single jurisdiction,” says Eastwell. “The more we talked about it, the more it made sense to give those guys autonomy.”

The Linklaters CEE offices have been victims of changing fashions, both in terms of geography and management approach. Physical offices are just too 1990s for Linklaters, and places like Prague and Bratislava have given way to the CIS states.

Mogg says: “Lately firms have tended to be less interested in growth and more focused on core markets. These things go in fashions and now the fashion is to focus on fewer markets.”

The test for any fashion is how many people copy it and how long it lasts. Linklaters’ central management will be hoping that in eight years time it will not have to bin its Ukraine practice to reopen in Bratislava.