Editors' Blog

Partnership 2008: supersize vs size zero

Posted 22/05/2008 by Alex Novarese

When you produce a piece of research covering 47 law firms and comprising more than 600 numbers there are, unsurprisingly, quite a few ways to work the data. So glancing over Legal Week’s breakdown of the 2008 partnership round at the UK’s largest law firms, published in today’s issue, there are plenty of fresh angles we missed out in the print edition.

What really caught my eye reviewing the table was the level of growth among partnerships, with the average top 50 firm growing its partner ranks by 6.9%. This surprisingly high figure appears to have been driven to a considerable extent by foreign ambition, given the relatively low proportion of London promotions this year. But perhaps the most striking finding is the wide disparity in the individual growth rates between different partnerships within the top 50.

So while the most expansive firm in the 2008 round, Olswang, saw its partnership grow annually by 22.9% after a year of aggressive recruitment and a healthy promotions round, Cobbetts, at the other end of the spectrum, saw its partnership shrink by 6.5%.

And this spread is not confined to a small group of firms. Six firms saw their partnerships grow annually by more than 15%: Olswang; Eversheds; Norton Rose; CMS Cameron McKenna; Bird & Bird; and Field Fisher Waterhouse.

A further six practices saw their partnerships grow by more than 10%: Hammonds; Holman Fenwick Willan; Charles Russell; Burges Salmon; Mills & Reeve; and Watson Farley & Williams. This group typically married generous promotion rounds to sustained lateral recruitment. (Eversheds’ growth was bumped up by additions to its Eversheds International grouping.)

In contrast, there is also a sizeable group at the other end that have kept a tight lid on partnership promotions. This group very loosely divides into three camps. The first category is top City firms keeping the partnership lean in anticipation of tougher deal markets and to keep driving their profitability to globally-competitive levels. In this group fall Freshfields Bruckhaus Deringer and Slaughter and May, which both saw slight shrinkage of their ranks, and Linklaters, which kept its partnership static.

A second camp comprises either expansive mid-tier firms taking a break after periods of rapid growth: both the Berwins, Shoosmiths and Halliwells.

A third (not totally distinct) camp include mid-tier practices wrestling with challenging markets, such as Hill Dickinson, Beachcroft, Cobbetts and Dickinson Dees, which all saw annual growth in the size of their partnerships of less than 3% - well below the average. Several of the above firms have already confirmed job cuts and unveiled financial performances for 2007-08 that, though far from disastrous, will be seen as disappointing.

So what does this tell us? Well, the latest indications, as reinforced by early financial results, are that current conditions are clearly separating those racing ahead from the laggards after several years in which virtually everyone was doing well. And the mid-tierers and regionals are so far not delivering on the promises that they would ride out the crunch best, perhaps because some of these are closely tied to the struggling UK housing market through bulk divisions.

For some it’s going to be a bumpy ride in the coming months and their identities are becoming more apparent.

alex.novarese@legalweek.com