Linklaters: making CC look like Save the Children

Before interviewing David Cheyne for the Sunday Times last year, I spoke with several former Linklaters partners who had been 'de-equitised' from the corporate department in the days of Tony Angel. Various epithets were used by them to describe Cheyne (formerly Links corporate head). Most are unpublishable. 'Strong meat' stands out as one of the more memorable.

After sitting opposite Cheyne, and questioning him for ninety minutes, it would be easy to characterise him as ruthless. In the flesh, he certainly lacks the warmth of his more gregarious counterparts at Freshfields or Slaughters.

But in the present economic environment, Cheyne and Davies have dealt head on with the two elephants that loom large in the boardrooms of most City law firms: overstaffing and falling revenues. Instead of piecemeal reductions, they have shown courage and strength in taking vigorous action which is swift, strong and arguably, visionary.

Whatever emollient words are offered by the likes of Nigel Boardman, Paul Olney and Chris Saul about partnership culture at Slaughters, the reality - which they know all too well - is that City law firms are a business. They need to be ruthless to survive and prosper. The unprecedented scale (and probable duration) of the present domestic and international economic crisis means their survival is under threat, if not now, then in two or three years' time.

Linklaters has paved the way for others to follow in significantly reducing headcount. Senior and managing partners in other firms should be grateful. Far from brand-shredding, the game that the big international firms must now play is brand-saving.

Dominic Carman -29 Jan 2009 | 00:00

This puts quite a different gloss on Linklaters' claim to become the premier global law firm - which ironically (cynically?) they repeat over and over at their recruitment events. A massive turn-off for anyone looking at training contracts any time soon.

No Thanks. -29 Jan 2009 | 00:00

During the next boom time Simon Davies will be hailed for being the managing partner of one of the most profitable firms. Who remembered Tony Angel’s ruthless “Clear Blue Water” when he retired? On the contrary, everyone hailed and applauded him for making Linklaters one of the most profitable firms. Like his predecessor, Simon Davies will not be remembered for the “New World”, but will be applauded for making Linklaters highly profitable.

What the staff and lawyers have is the ability to negotiate a better package (and not accept to any of this 'notice period plus two weeks for every year of service' nonsense). If they are not able to do so, they need to come out in the open against the management and threaten them with industrial action. They need to be as ruthless with their management as their management have been with them.

Anonymous -30 Jan 2009 | 00:00

To Anonymous: With regard to Tony Angel and Clear Blue Water, I would say Linklaters’ current actions are of a different order to that. And while Angel was applauded in later years of his term, his reputation was always strongly linked to controversial decisions, so that past was never really forgotten.

To Dominic: you seem rather cavalier about celebrating a 15%-plus slicing of a law firm’s fee-earner base. But what are you suggesting: that cuts are a good thing at any level? Five percent? Fifty percent? The distinction matters. Commercial law firms are some of the least cyclically-impacted businesses in the developed world. True, by their standards, they are under intense pressure and most will this year need to make substantive job cuts, but that doesn’t mean all issues of judgment go out the window.

There is also nothing unprecedented about this recession, it’s just a long time since we’ve had one this bad. Of course, this is business, but these are people businesses, so the motivation and morale of staff has a bottom-line value. Obviously, this issue becomes less pressing in a recession, when it’s easy to get staff, but bad judgement in these matters still costs money and can damage a firm’s reputation for years.

I wouldn’t at this stage say that is what Linklaters is guilty of. And if any firm can make this kind of decisive action pay dividends, it’s Linklaters. But I’m not entirely convinced they’ve got the balance right this time (just a personal view). In addition, the communication around this whole episode has been poor.

Alex -30 Jan 2009 | 00:00

Alex, I can agree with you only to the extent that Linklaters have not got the balance right, but can't seem to agree with regards the difference between Clear Blue Water and New World.

If this recession is so bad and affecting so many firms, why aren’t the big NY firms (the likes of Cravath, Latham and Skadden) firing? It is abundantly clear that what Linklaters is doing is a PEP protection measure. Please tell me why a firm which has lead the global M&A and various other league tables and has received the largest number instructions on insolvency (if what they claim is to be believed) needs to take such drastic measures in comparison to its competitors? The truth will be evident when the FY 2009-10 numbers are out and the PEP for Linklaters’ partners is higher than its competitors.

My personal opinion – Linklaters has always been ruthless and concentrated on its bottom line. Whether it is Clear Blue Water, which sent shock waves about what Linklaters represented and changed the image and perception of the firm, or the CEE cull which happened in 2008, the image of Linklaters being profit-oriented and ruthless remains consistent. New World is just a reiteration of this image and there is nothing new or different. This is why I believe that there is little difference between Clear Blue Water and New World.

It appears that Linklaters is not flustered by the “ruthless image” and wants to remain highly competitive and profitable. Whether this is the right way forward is anyone’s guess! One thing though – all future employees (whether trainees or laterals or other employees) should think twice whether they are happy to sign up with such a firm!

Anonymous -30 Jan 2009 | 00:00

Many will disapprove of the scale of the actions taken by Davies and Cheyne, and Alex Novarese is right to point out the potential downside that the decision to cut deeply will have an impact on staff morale and reputation. There will certainly be one. But I think Dominic Carman has a better sense of why Linklaters needs to take action in the current parlous state of the market.

Both the "elephants" that Cheyne and Davies see - falling revenues and overstaffing - require swift, decisive, and, yes, ruthless action, both here and abroad. For were they not to be addressed, Linklaters would be damned by the legal media if it didn't take commensurate action to preserve PEP as far as was adequately possible.

It is the interests of the equity partnership and the key global clients that are at stake here; the views of salaried partners, associates, and BD staff are of little moment to a legendary dealmaker like Cheyne, who sees a bigger picture - as did Tony Angel before him. In any event, it is Davies' job to manage such concerns, not the senior partner's. In my view, whilst he is "strong meat" to some, he has the right recipe for success.

Comments about his alleged lack of personal warmth also miss the point - it is his management skill that we are assessing, not his ability to get on with journalists.

Anonymous -02 Feb 2009 | 00:00

My blog makes no mention of the personal warmth - or lack of - of David Cheyne or Simon Davies, so I’m not sure how that point has come up. I’m also an avowed admirer of the firm and like to think I get on pretty well with a reasonable group of partners there. My initial reaction may be proven wrong in time, but it’s produced in good faith, not because of any relationship issue. I’m also not in the habit of dishing out criticism because people are difficult to deal with – if I gave firms a bad write-up because of an awkward partner I’d have to write 10 diatribes a week.

Alex -04 Feb 2009 | 00:00

I doubt these cuts will make Linklaters less attractive to prospective trainees or lateral hires. If anything, they'll enhance the firm's reputation for quality control. Slaughters is hard to get into and look at their reputation.

playftseforme -06 Feb 2009 | 00:00

Of course it makes Linklaters less attractive. After this, why would anyone who can get into Slaughters or Freshfields go for Links?

Anonymous -06 Feb 2009 | 00:00

Because Freshfields is no good at finance and a little worse at corporate?

M -10 Feb 2009 | 00:00