CC kicks off review of partnership structure

Clifford Chance (CC) is set to cut a number of partners globally, with the firm today (4 February) announcing an extensive review into the size and shape of its partnership.

The review, which comes as magic circle rival Linklaters also prepares to cut some 35 of its partners, will need to go to the partnership for approval before the cutbacks can be implemented.

CC said the review, which is being led by the management committee and the partnership council, is likely to result in partners – both salaried and equity – leaving the firm by the end of the calendar year.

Managing partner David Childs refused to comment on how many partners will go but said the review will be looking at every practice area and office. It is unclear at this stage whether any offices will close as a result of the review.

Childs said: “We regret having to take this course of action but it is essential to the success of our firm. To achieve the firm’s strategic objectives we need to reflect the changes we see in our clients businesses today and invest in those areas that we believe will be important to them and to us tomorrow.”

The news comes just a month after the magic circle giant announced that it was planning to cut up to 80 fee earner positions in its London office with a separate review of the office’s business support function expected to be announced shortly.

According to Legal Week‘s 2007-08 Top 50 rankings CC had a global partnership of 633, including 395 equity partners. Last year the firm boasted an 11% increase in revenues, taking turnover to £1.329bn, and a 12.5% increase in profits per equity partner (PEP) to a new mark of £1.151m.

However, the firm has appeared to suffer more than many of its peers in the current financial year, with turnover at the half-year point understood to be 5%- 7% down, and PEP expected to fall by up to 20% this year.

Childs said: “In the past 18 months we have seen a reduction in activity. We now want to put what we have learnt [into play] and see what the markets will demand.”

Commenting on the plans, one ex-CC partner said: “I am not surprised at all. It depends on what restructuring the practice actually means. Will they de-equitise? Will they move away from a lockstep model? The devil will be in the details. Their smaller offices will also be more vulnerable to closure, which I am sure they will do if they are looking at reducing costs.”

CC became the first magic circle firm to announce job cuts as a result of the global recession. However, the scale of its cuts were dwarfed by Linklaters which last week announced a redundancy consultation that is expected to see up to 120 lawyers and 150 business support staff in London lose their jobs.

In addition to the fee earner redundancies, Linklaters’ restructuring – dubbed Linklaters New World – is expected to see more than 35 partners leave the firm worldwide on top of normal retirements. Around 10 are expected to be in London.

For more analysis, see Editor’s comment: No hiding place.

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