Links’ balancing act hits real estate

Move from core practice area matches competitors’ strategies

Real estate departments are suffering from fee pressures
Real estate departments are suffering from fee pressures

Real estate teams are always going to take a hit at a time when fee pressure is at the core of firms’ problems, but Linklaters seems
to have wielded the largest axe.

Sources said the property team has been one of the big victims of the firm’s partnership restructure, with at least two equity partners understood to have been axed.

Linklaters stated that it has no plans to turn real estate into a corporate support function and said it advises on high-level standalone property deals. It also said it does not intend to follow Macfarlanes’ lead by merging real estate into corporate or finance.

The firm attested to being “fully committed to its market-leading real estate practice, which has been successfully focusing on high-end, complex real estate work”.

Competitors say Linklaters was strong in the area 10 years ago, but has gradually become less visible, while the silver circle has edged towards the top of the market.

The loss of construction partner Ann Minogue to Ashurst in 2009 and real estate star James Knox to Berwin Leighton Paisner in 2010 were big-name departures, with sources saying that the practice in total has shrunk from some 25 equity partners to only a handful
in less than a decade.

This is not entirely new: Linklaters made a shift away from real estate 10 years ago in response to fee pressure. None of the other magic circle firms are first and foremost real estate firms, and sources say the latest cuts merely balance the scales and put Linklaters on an equal footing with Allen & Overy, Clifford Chance and Freshfields Bruckhaus Deringer – the latter of which carried out a real estate cull late last year.

Ashurst, meanwhile, moved six real estate equity partners down its lockstep when it restructured its equity last year, which was more than in any other practice.

The reason? Fees. Property deals can be profitable at the top end, but firms cannot put as many fee-earners on mandates for as many hours as they can with big M&A.

“What’s happening is now there won’t be a large difference [between the magic circle practices],” said a competitor.