I love this time of year.
The sun emerges from its wintry slumber. Birds awaken in their tree-top homes. And freshly made-up partners get to strut about, enjoying their new senior status.
The other great thing about partner promotions is that it gives a sneak preview of a law firm’s performance for the financial year.
On that basis, then, Linklaters’ massive increase in promotions for 2003-04 of 31 new partners compared with 19 in 2002-03 should mean that the magic circle firm is in line for a blistering set of figures.
Compare this with Freshfields Bruckhaus Deringer. The firm has actually seen the number of new partners decline over a three-year period, falling from 29, to 23 to just 16 promotions for this current financial period.
Look closely, however, and the number of German partners gaining equity at Freshfields has declined from roughly equal numbers to London in 2000-01 and 2001-02, to just three this year compared with the UK’s seven.
Aside from the post-merger flush of confidence that promotions provided to Freshfields’ German cousins, this financial year has seen a slight dip in revenues from the region under the weight of the recession. And, importantly,
Freshfields does not have salaried partners, only equity.
Linklaters, on the other hand, does have salaried – or ‘national’ – partners. However, the firm refuses to say how many of the 31 partners made up this year are equity or paid at a fixed rate.
It’s certainly known that the new London corporate partners Raymond McKeeve and Olivia McKendrick are equity, since the head of the group David Cheyne will not have salaried partners. But of the others? Our sources tell us that a large chunk of the 19 new international partners are salaried, as well as a percentage of the 12 lawyers made up in London.
If all were admitted to the equity, this would have a hell of an effect on the bottom line, as the firm would have to sustain a jump in senior associates’ pay of around £105,000 to some £360,000, based on last year’s bottom of equity.
But new salaried partners would see their income grow to a more manageable £250,000.
What’s more, partners in some areas of Europe, including Germany, where four were made up, are paid on a weighted basis, lessening the overall impact on income.
Certainly, from a motivational point of view, an increase in partner promotions is a wonderful thing. But it is also a balancing act for Linklaters, which, as revealed by The Lawyer, is currently 12 per cent behind budget for the first nine months of the financial year.
A final surge in billings may readdress that. Let’s hope so for next year’s crop of partners.