It’s just as well Clifford Chance‘s management doesn’t sit on the top floor of that heavenly new Canary Wharf tower. Imagine how wistful managing partner Peter Cornell might become if he kept catching glimpses of Linklaters‘ building. The world’s biggest law firm may have more juice bars than anyone else in town, but for a change it has actually been beaten to the punch by Tony Angel & co over in Silk Street.
For at last, there are indications that CC is about to get tough on its own partners. It won’t be without pain; Linklaters partners will attest that the embers are still glowing, more than a year on. (Although Linklaters’ biggest problem was not what it was doing but the fact that it was so darn defensive about it.)
Conspiracy theorists might argue that CC’s leisurely compensation review process, where virtually every partner was canvassed, was just a way of introducing the performance issue into the collective bloodstream as a precursor to empowering central management.
Certainly the Wirot comedy – whereby the management had to jump through all sorts of constitutional hoops to get partners to vote for expulsion – highlighted how little room for manoeuvre the firm’s leadership had. But don’t be fooled: this isn’t about a lone partner in Bangkok. It’s because at £644,000, CC now has the lowest average partner profits in the magic circle. Its plateau partners are on £734,000 – less than Ashursts’ £800,000 and Herbert Smith’s £810,000. Its revenue per lawyer, at £337,000, even fell behind Lovells this year. And get this for a telling stat: 200 out of the 439 equity partners are at the top of the lockstep. The demographics are certainly top-heavy – the vast majority of partners are in the 41 to 46 age bracket. Do they all deserve their equity take?
More savvy CC partners admit with a despairing cadence that Germany, with its old guard, is the next place to be sorted out. It makes okay money, but only because it’s highly leveraged, rather than through the all-important revenue per lawyer.
But at least CC’s move finally confronts two potentially incendiary issues. It deals with under-performers, but also sends out a message to the increasingly impatient salaried layer that new blood is needed in the equity. Lord knows there’s enough junior partners hoping to persuade the firm that they can contribute more than the faded stars.