The banking department at Allen & Overy (A&O) has issued an ultimatum to its corporate colleagues to get their house in order after the London corporate group recorded a net loss of some £10m in the last financial year after partner profit allocation.
A&O sources have told The Lawyer that, during a particularly stormy meeting in May this year, the representatives of the corporate group were told to produce a strategy to improve the business by December this year.
Confirming the meeting, one source said: “Some people in the banking practice will get more forceful in their demands for change. If nothing happens, they’ll require management intervention.”
A&O’s London banking group has 54 partners, the same number as in the corporate group, but is understood to generate two and a half times the amount of revenue. Average profits at A&O last year were £609,000.
One source close to A&O said the corporate practice needed to cull dramatically its number of partners, but that the problem was intractable after a senior M&A lawyer had ruled out any programme of headcount reduction.
An A&O partner said: “Banking is a milch cow that is being squeezed every year and the people are working harder and harder. There’s just not an acceptance within the corporate practice that they’re chasing a dream that’s unattainable.
“It would require a cultural change for them to acknowledge that the last 10 years have been a failure and that they need to be more narrowly focused.
“We’re not just principals in this business, but investors in it.”
Managing partner David Morley said: “We have meetings all the time. Some are more heated than others. Undoubtedly corporate has had a tough time over the last three to four years, but things are coming back.
“Part of the model is to have a breadth of business so you’re not overdependent on one market.”