Another magic circle firm makes partners redundant

Redundancies among partners at Clifford Chance, reported here last week, have been following by sweeping changes at Allen & Overy:

• Partners – A global reduction in partner headcount of approximately 9% (47 partners) and around a further 7% (35 partners) subject to equity adjustments. Around half of those affected are in London. This process is at an advanced stage and will be completed by the end of this financial year on 30 April.

• Other fee-earners – A proposed 9% reduction in numbers of associates or other fee earners globally. Around half of these are proposed to be in London, where the redundancy programme is likely to result in approximately 100 associates or other fee earners leaving the firm. This will be subject to local employment processes which will start immediately.

• Support staff – A proposed 9% reduction in support staff headcount. Again, roughly half of these people are expected to be in London, where around 100 staff are likely to be affected. This will also be subject to local employment processes which will start immediately.

• Trainees – Current trainees and those with future training contracts at the firm are not affected.

• Pay - For 2009, pay will be frozen for all staff globally – fee-earning and support staff alike. This will be subject to local employment law, where applicable.

• Fee rates – Acknowledging the impact of the global financial crisis on the firm’s clients, Allen & Overy’s headline billing rates are to be frozen until further notice.

• Demerger of private-client practice group – As part of this strategic review, Allen & Overy’s private client practice is become an independent firm, Maurice Turnor Gardner LLP, with effect from 1 May 2009. Staff in the private-client group, with the exception of trainees, will be at risk of redundancy.

Commenting on the moves, the firm’s managing partner, Wim Dejonghe, said: “In the rapidly changing environment in which we operate, the reality is that there is simply not enough work to keep all our people sufficiently busy and we do not see that changing in the near to medium term.

“We have reluctantly taken the difficult decision to act now, from a position of financial strength, so that we can offer better terms to our departing people than might otherwise be the case.”

The firm added that the cost of restructuring would be paid from its cash reserves. “The impact on the current year’s financial results is forecast to be £44m,” it said.

Posted at February 19, 2009 03:36 PM