MAGIC circle law firm Linklaters is planning cuts to its headcount that could see up to 35 equity partners leave in the next year, sparking fears a second round of redundancies could be about to hit the City.
It follows confirmation last week that Allen & Overy is restarting its annual equity management – which could see up to three per cent of partners asked to leave – for the first time since 2009, when a firm-wide restructuring saw around 450 staff lose their jobs.
Sources close to Linklaters played down reports that the redundancies were part of an equity restructuring. The cuts are not believed to be linked to an ongoing review of how the firm organises its lockstep – the structure that determines partners’ progress through the firm and remuneration.
Since the headline-grabbing staff cuts that hit City firms back in 2009, large-scale redundancies in the sector have fallen off. Instead firms have continued to trim numbers on a much more sporadic basis, as well as targeting cost cuts through outsourcing,
It’s a trend that industry insiders expect to see continuing into 2012 as market conditions remain uncertain, particularly for firms reliant on a steady pipeline of corporate deals.
“The legal sector is clearly not immune to the economic crisis, and firms are now constantly assessing their costs,” said James Tsolakis, head of legal services in RBS’ corporate banking division.
“We would expect the trend for job losses in the sector for 2012 to continue, but in trickles rather than floods.”
A Linklaters’ spokesperson said yesterday: “We continually look at our business and partner base in the context of the markets and our clients’ needs. A natural part of this process includes some new partners joining and some partners moving on. Where decisions are taken by the firm, they are taken reluctantly and only ever in the long-term interests of the firm.”