The City giant's uncompromising focus on performance has reaped spectacular dividends, but under new managing partner Simon Davies, will the upward curve continue?
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In a rare honour for the Legal Week Wiki, the first Linklaters contributor was none other than legendary outgoing managing partner Tony Angel (seriously), who stated plainly that the firm is "aiming to be the best global law firm on the planet".
By most yardsticks, Linklaters is already well on the way. The firm is the most financially successful of London's global big four while also having a widely-spread and effective international network. In 2007-08, average partner profits rose by 11% to hit £1.441m and global turnover jumped by just over 15% to reach £1.293bn.
Indeed, many would say that Linklaters has been the most outstanding performer among London's top firms over the last five years, having recovered from a painful period between 2002 and 2004 when its international expansion had stalled and profits stagnated. The firm responded with a controversial but ultimately successful drive that begun in 2002 to reshape the practice and exit under-performers. With the firm established as London's second-largest law firm by revenue, Linklaters has in many ways stolen the position of Clifford Chance (CC) as the pace-setter from which rivals pilfer strategy.
In 2009 the firm underlined that status after finally seizing CC's crown as the world's largest law firm in revenue terms. While partner profits dipped 9% to an average of £1.302m, most observers will have viewed that as a highly creditable performance given the global recession.
There have been setbacks along the way, of course, notably an ill-fated attempt to bolt on a private equity team, several rebuffed foreign merger attempts and a continued struggle to bring its German practice up to scratch, but the wins easily outweigh the losses. In addition, the current executive team of Simon Davies, who assumed the role of managing partner in 2008, and senior partner David Cheyne appears to be delivering for the firm.
"The quality of people is very good, even by City standards," says one optimist. "It's also true that the partners are not as stand-offish as the firm's general reputation."
True, the firm's unabashed focus on performance and drive to concentrate on the top end of the global legal services market has at times provoked controversy. Notably in early 2009 the firm attracted some criticism for its handling of a major programme of job losses, which claimed around 250 jobs in the UK alone. Nevertheless, the firm's claim to global leader status has never looked more compelling.
The firm's direction took a striking shift in the late 1990s, when it begun to commit to international expansion in earnest, notably with its ground-breaking grouping of leading international firms under the Linklaters & Alliance brand. The 'Grand Alliance' of five European firms launched in 1998 and was to lead to three mergers, including Linklaters' prolonged and bloody takeover (and subsequent restructuring) of German practice Oppenhoff & Raedler. The firm also secured full mergers with its Swedish and Belgian allies, Lagerloef & Leman and DeBandt van Hecke Lagae & Loesch respectively.
But it soon became apparent that managing the logistics and egos of so many proud institutions was easier said than done and two of the allies, Dutch heavyweight De Brauw Blackstone Westbroek and Italy's Gianni Origoni Grippo & Partners, walked out of the grouping. The two firms, arguably the most respected of the alliance members, both balked at reshaping their practice to fit in with Linklaters' hopes for a London-led merger.
From 2001 onwards Linklaters shifted gears as it began to struggle with its enlarged practice and the sharp slowdown in deal activity. First to go was the grand alliance itself, with Linklaters resuming sole control of its destiny. Further changes in style came as understated new senior partner Anthony Cann took over from the charismatic Charles Allen-Jones. This left managing partner Tony Angel, who was first appointed in 1998, more space to usher in detailed performance measurement to an extent unprecedented at a major law firm.
In a related move, Angel also helped to drive through a painful restructuring of its business, beginning in 2002, which led to a number of departures at all levels of the business. The move that year saw Linklaters concede that it was taking steps to raise its staff attrition from 10%-15% to around 20% annually, a stance that led to the exits of dozens of London lawyers.
The tough focus on performance was divisive but ultimately proved effective and Linklaters' early-mover advantage was to go on to help drive profits and revenue growth strongly. Firmwide revenue now stands at £1.293bn, putting the firm only narrowly behind CC as the world's biggest law firm, with average full equity partner profits of a whopping £1.441m.
Still, even if the last three years have seemed to go very much Linklaters' way, the firm has still had the odd reverse, notably in 2006 with the fractious departure of the bulk of its City private equity team to the London arm of Kirkland & Ellis. The announcement in 2007 that the firm was to shut its 25-partner Cologne office (ironically the head office of the legacy Oppenhoff) to launch a new practice in nearby Duesseldorf was a reminder that its Germany practice still needs work.
Nevertheless, the firm must be feeling confident as new managing partner Simon Davies takes up his role in early 2008. The polished Davies (pictured below right), who secured the job in an election against several higher-profile contenders, has big shoes to fill in the shape of Angel, who has probably done more to sell the concept of law firm management than any individual. Also of interest will be seeing how Davies works with David Cheyne, Linklaters' outstanding M&A heavyweight, who became senior partner in 2006. However, the early signs are that, outwardly at least, the pair has formed an effective team.
In early 2008, Links was rated as the law firm with the strongest brand in the annual Superbrands survey, ahead of its magic circle rivals and firms such as Eversheds, Herbert Smith and Lovells.
In May 2008, the firm split from its offices in Budapest, Bucharest, Bratislava and Prague, a move which was met with surprise from rival firms. The firm launched a new practice to service emerging markets in Europe, the Middle East and North Africa (EEMENA), to be led by capital markets partner Nick Eastwell (though Eastwell was to announce his retirement the following year).
The firm won both Cross-border M&A team of the year and Banking and restructuring team of the year at the 2008 British Legal Awards, but early 2009 saw the firm take drastic measures in response to the economic slowdown, with news emerging that the firm was to restructure its partnership - a move expected to see the departure of up to 120 lawyers and 150 business support from the firm's London base and 35-40 cuts from the firmwide partnership.
However, Linklaters managed an above-average financial performance in 2008-09, as most law firms were struggling with the worldwide recession, with the firm roughly maintaining its fee income at £1.298bn. The performance was enough to make the firm the largest legal practice in the world in revenue terms. Linklaters' profitability, likewise, remains at the top reaches of the global market, with average profits per equity partner of £1.302m.
"Not as stiff as reputation, especially in banking," says one contributor. That's still pretty stiff though - except for the pranksters in finance, of course. However, the firm's unashamed focus on performance comes at a cost, according to one contributor. "The profitability of the firm is undoubtedly impressive but anyone who works there will tell you that it has taken its toll on morale," argues the poster. "Even some of the millionaire partners are pretty down in the dumps - I get the impression that many are still waiting for the knock at the door when 'their turn' comes."
He adds: "[The firm is] profitable but brutal and for all the platitudes about there not being a "Linklaters type", there most certainly is - it is very hierarchical and the partners like to promote in their own (white, male, middle class, workaholic) image."
While there is no question that the firm's sweeping restructuring reinforced its hard-nosed reputation, the firm does usually receive a clear thumbs-up from the competitive associates that make the grade. Legal Week Intelligence's 2009 Employee Satisfaction Report found that Linklaters was the highest-ranked UK law firm according to its own associates' satisfaction a redundancy programme that was unpopular internally.
Corporate is still very much the heart of the firm, even if the firm is viewed as having been a little less visible in its European heartlands of late. Within corporate, the firm still has one of the top equity capital markets teams. And as you would expected from a serious M&A firm, Linklaters has a serious competition practice. But "finance has grown a lot and done pretty well," says one Links-watcher. Indeed, the rise and rise of Linklaters' finance practice, bolstered by a decade-long recruitment push, has been a hallmark of its recent development, making it arguably the only London firm to get near building top-tier teams in both finance and corporate. While the practice is well represented across the board, capital markets, leveraged finance and structured products are its strongest teams. However, one contributor is more sceptical of the firm's progress in this area. "Pre-eminent in corporate, second rate (at best) in finance." Alongside CC, Linklaters is also a rarity as a top London firm to pack a real punch in real estate, where the firm has an enviable high-end practice. The firm's full service credentials are underlined by quality teams in restructuring, projects, tax and pensions.
Click here to read an analysis of David Cheyne's leadership of Linklaters' corporate practice.
Broad, with a string of foreign offices across Europe and Asia. That said, the firm does have weak patches, notably in Italy and the Netherlands, where the legacy of splits with former alliance partners has left Links playing catch-up. More importantly, the firm knows that it could do better in key markets such as Germany and the US. Asia and several other emerging markets have seen the firm thrive more. The hallmark of the firm is a well-put together network rather than individually-outstanding offices.
In October 2007 the firm announced it was opening a new office in Duesseldorf - at the same time as Links confirmed it was axing its sizeable Cologne arm, which it inherited from the merger with Oppenhoff & Raedler. Indeed, Cologne - which numbered around 110 lawyers when news emerged of its imminent closure - was actually the head office of the legacy Oppenhoff. With the two cities just 40 miles apart, the switch was seen by some as a slightly odd move.
More recently the firm has been in expansion mode in the US, despite the current slowdown, making a string of senior appointments in New York.
Vodafone is still probably the firm's most active corporate client. Others include Scottish & Newcastle, Intercontinental Hotels and BAe. Plenty of banks too: RBS, Merrill Lynch, UBS and CSFB.
Take your pick. In the City, David Cheyne is still seen as a cut above pretty much everyone else. But there are plenty of other respected partners like Matthew Middleditch, Jeremy Parr and Charlie Jacobs and Olivia McKendrick (pictured). High hopes are also riding on its recruitment in 2007 of CC private equity partner Ian Bagshaw, though it will be interesting to see the extent to which Linklaters' buyout push survives the credit squeeze.
Acquisition finance has energetic performers like Nick Syson and Adam Freeman. Finance can also call on securities specialists Keith Thomson and Carson Welsh, derivatives lawyer Simon Firth and Jim Rice in securitisation. Additionally, the firm in 2007 recruited senior Freshfields finance partner David Ereira in a very rare move between the two arch rivals. In competition, respected names include Gavin Robert, Diana Good and Alec Burnside. Property has an abundance of established partners, among them James Knox, Martin Elliott and Patrick Plant.
Linklaters also recently made a splash in Germany with the hire of Clifford Chance partner Kolja von Bismarck, one of the country's top insolvency lawyers.
On one level, excellent, since the firm has been one of the most prolific promoters of new partners at a major City firm in recent years - providing you can make the grade.
Linklaters made up almost 100 new partners internally between 2004 and 2007, including 38 in its 2007 round, which compared very favourably with its peer group. Unsurprisingly given its practice profile, the most opportunities were in corporate and banking. This year the firm made up a more modest 28 partners, just seven of whom are based in the City.
In common with most major UK law firms, Linklaters in 2009 cut its salary bands for junior lawyers, lowering its salary for newly-qualified lawyers to £61,500 from 1 May - compared with last year's figure of £66,600. A lawyer moving from NQ to one year PQE now earns £68,000, compared with £70,400 in 2008, while the rate for a lawyer with two years' experience dropped by 11.6% from £82,600 to £73,000. First seat trainee salaries remained static at £37,400. Click here to see how Linklaters compares to its magic circle peers. Despite the reduction, Linklaters is viewed as one of the most generous UK law firms and it remains firm policy to pay at the top of the market.
The firm also pays what is widely regarded to be one of the most generous bonus schemes for top performers, worth up to 40% of salary.
As one contributor says: "Working as I do at a magic circle firm, I have to admit that Linklaters has got the best salary structure (I don't work there incidentally!). Compared to most other quoted bonus schemes, where only a handful of people actually achieve what is stated, theirs, from what I know, is genuine. I know a number of people there and they are all getting hefty bonuses. Two are 4.5 years PQE and both now on six figures and got over 30% bonuses. Another is 1.5 PQE and got a 35% bonus. The 1.5 PQE did an astonishing number of chargeable hours, admittedly, (about 2,700) but one of the 4.5 PQEs got a 32% bonus off the back of just over 2,000 hours. They do seem to value the contribution overall and the quality of the individual not just the number of hours. Their lockstep salary also doesn't plateau noticeably (many other firms start to flatten out at around 5-6 PQE as this tends to be just above the publicised rates). Links publish all their salaries internally through to 10 years PQE and have no banding at any level."
Perks are good too. "You get gym membership and a decent canteen," is the ringing endorsement from one well-toned reader.
For more discussion of the firm's generosity (or lack of), see the Comment section below.
(How gruelling is the interview process? Is it light-in-your-eyes, good cop, bad cop stuff or a friendly chat over a Pimm's with the graduate partner? Did it give you a taste of life at the firm or were you too busy counting the zeros on the pay scale to ask your own questions? - Wiki Ed.)
Click here for more career information.
Even by City standards this is a hard-working firm. Legal Week Intelligence's 2009 Employee Satisfaction Report found the firm's assistants were somewhat unhappy with its work/life balance, though its satisfaction ratings for billable hour expectations were only slightly below the average.
"The annual billing target is 1,700," begins one contributor, but the reality is that people will often go above that. "The firm has made a bit more effort very recently with schemes aimed to make benefits a bit more flexible, including a 'time bank' scheme that lets assistants accumulate leave for hitting utilisation targets."
The incoming managing partner has promised that the firm will put in a bit more effort in this area.
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