Linklaters’ management is set to face tough questions over falling profits at its upcoming partners’ meeting, as lawyers’ discontent grows over declining income.
According to well-placed sources, for the first nine months of the current financial year Linklaters is already 12 per cent behind budget. Profits are 7 per cent down on the comparable period in the last financial year. It is understood that, based on the nine months, each lockstep point is currently worth £23,463. At plateau, Linklaters partners hold 25 points.
Based on estimations for the full financial year that each point would be worth £30,000, partners at the top of equity would be paid £750,000, resulting in a 17.1 per cent drop on plateau profits compared with 2002-03.
However, insiders said Linklaters, for the third successive year, has implemented a 10 per cent retention on profits, meaning plateau partners would be paid £675,000.
In 2002-03, Linklaters reported top of equity at £905,000, but according to documents seen by The Lawyer, partners at the top of equity received £815,000; while for 2001-02, plateau profits were reported at £850,000, although documentary evidence shows the figure equated to £765,000.
Linklaters managing partner Tony Angel declined to comment on specific figures, but said: “We’ve had good numbers at the half year.” He said the firm concentrated on figures for the six months and full year, adding: “It’s highly dependent on billings.”
On retained profits, Angel said: “The gross amount goes to partners. Firms fund themselves in different ways. Some goes into distribution and some into capital accounts, but it’s all distributed.”
Linklaters is holding a firmwide meeting for partners on 26 and 27 March, where the firm is also expected to put forward plans to change the timing on distribution (currently every two months) potentially to follow its quarterly billing cycle.