DIBB Lupton Broomhead has fired 11 partners in an act of management blood-letting at the end of the firm's financial year.
The sackings, described by Dibbs as “counselling out,” occur across the 128-partner firm. The partners may work out their notices, ranging from six to twelve months.
They will also receive external employment counselling costing the firm £110,000.
London-based managing partner Paul Rhodes says the departing lawyers are good in their own right but did not find the new structure suitable.
“I do not want these people branded as failures,” Rhodes says. “Basically, they are victims of the reorganisation in the way we conduct and process our business.”
A ongoing top-to-bottom restructuring will continue into the next financial year.
The 11 partners are on “fixed share equity”, and also receive equity drawn from the profit pool. They are thought to earn between £85,000-£135,000,
Partner performance would have been judged partly on billing. Other criteria include the ability to bring in, manage and delegate work. Technical, managerial and leadership skills are also considered.
The partner shake-out results from the strategy of Dibb's newly-structured management to sustain business growth and echoes concerns among the
firm's associate solicitors.
Associates benefit directly. Eleven will be promoted into the soon-to-be-vacant positions. Six equity external partners will be recruited.
Dibbs has also altered its partner appraisal and objective-setting. All partners will receive very specific, measurable objectives in the coming months – including the uncompromising Rhodes himself.
Some other partners in addition to the 11 going have
already received tough performance reviews.
Rhodes says firms are under market pressures to control fee charging, cut costs, protect profitability and maximise fee-earning efficiency.
“One of the keys for managing in a low-inflation economy is to take the cost out of the profit and loss. Operating conditions are hard, and pressure on margins will not go away.”
Dibbs says its accounts show the firm is riding out such pressures. Billing turnover is thought to have grown from over £50 million in 1993-94 to around £55 million for 1994-95.
Profits are thought to have risen by 5 per cent in the same period. Profit per partner is thought to have grown by around £10,000 to £270,000.
Projections for the coming year are believed to show the same rate of growth, targeting £61 million in billings. The firm carries no medium-term debt, it is understood.