Turmoil and triumph at the magic circle
It was all go in the magic circle in 2006. Allen & Overy (A&O) began the year by slashing equity points for its London-based project finance group in an effort to combat the weak dollar and the group’s profitability.
The firm’s lockstep was fudged later that year when banking partners Tim Polglase and Robin Harvey, both former lateral hires, were given extra points to close ranks after the departure of Stephen Gillespie to Kirkland & Ellis (where he would join former Linklaters private equity stars Graham White and Raymond McKeeve).
Worse, A&O discovered it was battling a £26.2m pension hole, equivalent to £85,000 out of each partner’s pocket, which would take 10 years to eliminate.
A&O’s decision to deal with associate revolt in its ranks took up plenty of management time. It restructured its associate career path with a radical overhaul of its remuneration system, which saw the introduction of a performance-related bonus.
A&O’s lack of confidence was underlined that year by The Lawyer’s shock revelation that the firm had approached Freshfields Bruckhaus Deringer for a merger – a suggestion politely rebuffed by Freshfields’ leadership.
And things were brewing at Freshfields. It launched a full-scale review of its equity partnership, which would result in a series of de-equitisations, and embarked on the reform of its pension scheme – slated to save £14m. The internal reforms, dubbed ‘Size and Shape’, would come under intense media scrutiny in 2007.
Clifford Chance celebrated winning Law Firm of the Year at The Lawyer Awards, in recognition of its turnaround and record year.
Meanwhile, Linklaters, its painful shake-up behind it, posted outstanding results. The firm had more millionaire partners than any other firm in the City, with 124 of them pocketing in excess of £1m. However, no such largesse was extended to Liberty and the Tate Museum; Linklaters withdrew its pro bono secondments to both organisations, claiming that it was ‘too busy’ to provide resources.
The rich and infamous
Warrington-based personal injury firm Avalon Solicitors had the dubious honour of housing the country’s richest solicitor in Andrew Nulty. The Lawyer revealed that he took home £13m that year. However, it later emerged that Nulty was being hauled before a Law Society disciplinary tribunal for his involvement in coalminers’ compensation awards from the controversial Coal Health Compensation Schemes.
The year of the super group
Transport for London (TfL) general counsel Howard Carter unveiled plans to create a Greater London Authority (GLA) legal supergroup, combining the legal departments of the GLA, TfL, the London Development Agency, the London Fire and Emergency Planning Authority and the Metropolitan Police.
A sigh of relief
There was a welcome piece of good news for Hammonds, when it was cleared for negligence in the mammoth Football League case in June. Two findings of minor breaches of duty meant that the firm was fined just £4, vindicating its bullish attitude to the litigation.
The Lawyer Career Report 2006
The first-ever detailed analysis of partnership prospects at the top law firms showed that the traditional magic circle firms were actually the biggest internal promoters over the past three years.
The beginning of the end of PQE
Clifford Chance and Simmons & Simmons revamped their recruitment strategies after deeming the term PQE to be in contravention of the new age discrimination laws that came into play from 1 October.
The year of Eastern promise
China shot to the top of the agenda, with Beijing and Shanghai equalling Hong Kong in importance for law firms for the first time.
The waiting is over
Richards Butler’s long search for a US merger partner came to an end with the news that it was doing a deal with Reed Smith.
College of Law does it by degrees
The College of Law became the first non-university-affiliated law school to win degree-awarding powers.
The Lawyer Awards 2006
Law Firm of the Year: Clifford Chance
Chambers: Four New Square
Partner: Chris Lingard, Follett Stock
Barrister: Nicholas Stadlen QC, Fountain Court Chambers
Tim Hailes, JPMorgan Chase
Several general counsel (notably Barclays’ Mark Harding) began to scrutinise diversity in 2006, but among the most vocal was JPMorgan Chase assistant general counsel Tim Hailes.
Hailes, a structured finance specialist, whose day job involved him in the regulatory debate over retail structured products, became a poster boy for the diversity movement in 2006.
Instrumental in setting up a gay employee network at the bank, Hailes made it clear that he wanted his outside law firms to work with Stonewall to foster an inclusive atmosphere within City law firms.