The Leader Column

So Allen & Overy (A&O) is the first of the major firms to cut partner drawings in response to the downturn. Its 20 per cent cut – a precautionary measure only – will leave its plateau partners scraping along on £1m a year instead of £1.25m.
It shows that in these times, a strong finance director (and A&O's Ian Dinwiddie is certainly that) is crucial. The fact that the firm is tackling the private client issue also marks a sea change. For years, the A&O line has been that a private client department is entirely consistent with running a global practice. That is not a line that many outside observers bought; A&O always swam against the tide on that one.
But the firm's strategic thinking has moved on. Indeed, The Lawyer understands that one of the options on the table was to phase out the private client business entirely. The group is understood to bring in some £5m, but the fact remains that most of its partners are very senior within A&O's elongated lockstep, and thus enjoy very handsome drawings.
And so on this issue of partner profits, A&O is demonstrating a sensible, hardheaded approach – particularly when you think of the dictum which says that every £10 reduction in billings means a £30 reduction in equity partner profits. It seems that, confronted with redundancies or reducing drawings, A&O partners saw it as a no-brainer.
Meanwhile, Clifford Chance has been trying to take chunks out of the $20m (£14m) US bonus bill it forked out last year. It has reduced year-end bonuses for its US associates – but has pegged them to Cravath levels. It is an astute enough move, given that Davis Polk has refused to pay out any bonuses at all, although it won't stop resentment in London, where partners tend to regard the New York market as entirely barmy.
Still, Clifford Chance partners should be entirely grateful that in the current climate its New York office is so focused on litigation, and in particular on securities defence work – thanks to US managing partner Jim Benedict's neo-umbilical relationship with Merrill Lynch.
As always, it is the smaller cutbacks that irritate people the most. Clifford Chance may be saving £600,000 a year by abolishing tea and coffee in non-client meetings, but it has caused plenty of bellyaching internally. But all this pales in comparison with Stephenson Harwood's abrupt cancellation of its firmwide Christmas party. Is that truly one of the dumbest management decisions this year?