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Those slightly less short-term partner prospects
Posted 9/04/2008 by Richard Lloyd
Given the challenges facing the global economy, London’s top firms can’t be accused of panicking, given the robust number of promotions so far handed out in the annual partnership round.
Clifford Chance (CC) and Allen & Overy (A&O) this became the latest firms to unveil their new partners, announcing on Monday (7 April) that they are adding 35 and 28 lawyers respectively to their global partnerships. The additions bring CC’s total partner head count to 648; A&O's to 505.
The message seems loud and clear: London’s elite will continue to promote from within, even though most firms are facing the most uncertain economic conditions for seven years.
Likewise, on 17 March, Freshfields Bruckhaus Deringer named 25 new partners. City heavyweights Ashurst and Herbert Smith followed with 17 and 18 promotions respectively - showing that there's a strong degree of confidence beyond the very top.
All of the firms promoted roughly the number of lawyers that they made up in 2007, except for Herbert Smith, which doubled its promotions from last year's crop of nine. But 12 months ago the economic climate was obviously very different: plenty of highly-leveraged M&A deals were closing and 'sub-prime' had not yet become a word to strike terror into the hearts of City bankers and lawyers.
Of course, a law firm partnership is ostensibly for 20 to 30 years, not merely a short-term economic cycle. Most managing partners readily point out that partnership appointments are about long-term investment.
"The question is, 'Is the business case and the individual person a plausible proposition for the next 25 years?'" says Freshfields senior partner Konstantin Mettenheimer. As he tells it, if you can tick all the right boxes for a partnership, you make the grade - no matter what the market's like.
But the track record of many leading firms shows that the number of promotions is actually pretty closely related to financial performance. In 2000, during the height of the dotcom boom, CC bumped up no less than 72 to partner, a level that neither CC nor any other magic circle rival has yet gotten close to repeating. Fast-forward to 2004, when top firms’ profits hit their low point post-boom and just 18 lawyers made the grade. Ditto Freshfields, which hit a high of 43 new partners in 2001 and then made up only 16 new partners during its own 2004 profits slump.
"In the past we were a bit more on the spot and influenced more by economic conditions," says Mettenheimer. "Now we're much more disciplined about taking a long-term view and focusing on the individual as well as the business case."
Both Mettenheimer and CC managing partner David Childs predict that the number of associates promoted to partnership by their firms over the next three years will broadly match the levels of the past two years.
"You have to take the long-term view," Childs says. "You have to think that markets will change - and many of our international offices are actually very busy."
Of the 123 new partners at the five firms, just 45 - little more than a third - are London-based.
Today is one of those times when law suddenly seems like the smart career choice over investment banking. Mid-level associates nursing partnership prospects are hoping that proposition continues to hold true for a few more years at least.
