Linklaters is assessing the future of its network of offices in Central and Eastern Europe (CEE), it has emerged.
Partners within the firm today (24 April) confirmed that senior management has been scrutinising Linklaters’ six offices across the region, reviewing the profitability, client relationships and viability of each.
The news comes as local press reports in the region this week claimed that the firm is considering closing four of the six offices - Bucharest, Bratislava, Budapest and Prague.
The review is being conducted by senior management and it is understood that no formal decision to close the offices has been taken or put to the partnership. Likewise, no proposal to downsize the firm’s CEE presence was put forward at Linklaters’ partnership conference last week.
Should Linklaters elect to close the four offices, it would leave it with a presence in Moscow and Warsaw in the wider region. The two offices, which opened in 1992 and 1985 respectively, have around 17 partners and 130 lawyers working across them.
The offices reportedly facing the threat of closure are far smaller – comprising some eight partners and around 125 lawyers in total. Partners have indicated that whatever the firm’s future stance, Moscow is likely to see increased investment in light of the country’s strong economic prospects.
News of the review comes as Linklaters moves to reorganise its German practice with its recent closure of its Cologne arm and the launch of an office in Dusseldorf. The firm is also reviewing the model for paying its German partners to bring their equity allocations in line with the firm’s core lockstep, ending the ‘discount’ on their drawings.
It has also been expected that Linklaters’ new managing partner, Simon Davies (pictured), would closely scrutinise the firm’s international network, which is still regarded as uneven despite a robust three years of financial performance.
One Linklaters partner commented: “It’s an item on Simon’s agenda and it wouldn’t surprise me [if there were office closures]. It’s a work in progress though – I don’t think they’ve taken a final decision.”
Commenting on the CEE claims, one ex-partner told Legal Week: “These offices have been reviewed before. Profitability has always been an issue, so closing them would not be surprising.”
The news comes six months after Freshfields Bruckhaus Deringer pulled out of Hungary, when its one partner, 28-lawyer Budapest operation split from the firm to become independent.
Linklaters declined to comment.
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Extremely disappointing news for all lawyers at Linklaters in CEE. We have worked very hard in CEE to arrive to the current level of high reputation, excellent revenues and very good profitability. Over the years, CEE has become one of the best practices for Linklaters - even if we have still remained a smaller market from a global perspective. In CEE, fee earners have put in much more than what they have taken out from Linklaters, in part because of the (unfulfilled) promises of the firm. And now the firm for which we have worked so hard would simply let us down - and announces this first to the press... We would deserve better treatment by Linklaters.
Very disappointing news, especially while the top brass continue to deny it. While in private most London partners feel at liberty to discuss a Linklaters post-CEE world, the 'top brass' continue to deny that a decision has been made. It's quite clear to everyone that the firm was hoping for a nice, 'amiable' settlement with certain persons who would be the public face of a new regional (or several independent) best-friend firms, The CEE lawyers deserve better and I'm sure that other NY or City firms will move quickly to ensure Links regrets it. Extremely short-sighted, but then again, what would you expect from a firm run by a green 40-year-old? I'm sure that CEE is just the beginning and, as the recent Cologne office closing, will be just another step in the de-globalising of the firm. I wouldn't feel comfortable if I were a partner anywhere outside of London or New York.
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