Dentons takes gamble on next generation of talent as partnership promotions soar
Norton Rose and Dentons stand firm on their decisions to buck the trend by making up record numbers of partners
May 03, 2006 at 08:03 PM
4 minute read
Even in a partnership promotion round set to be easily the most generous the City has seen for four years, Denton Wilde Sapte's announcement last week that it was to create 26 new partners stuck out a mile.
The numbers alone – more than double Dentons' internal promotion round over any of the previous three years and equivalent to 15% of its partner-ship – are striking.
But considering the issues that the firm has faced over the two preceding years, including the departure of more than 25 partners, management discord and falling profits, the firm can at least claim to have been bold.
The move, first reported on legalweek.com (26 April), will inevitably be seen as evidence that the firm is moving to rebuild its partnership by mobilising its senior associate ranks.
Similar forces are at play, if to a considerably less dramatic extent, at Norton Rose, which last month announced it was to make up 23 partners, equivalent to about 10% of its partnership and a record for the firm.
It is not a strategy that convinces everyone, especially in the case of Dentons, a firm whose current partner profits average of £279,000 lags well behind its peer group.
One senior recruiter sums up the view of many in his profession: "With Dentons, it is a rearguard action, not a strategic move. It has lost a lot of partners and it is not able to go out there and recruit [at partner level] because it has very little clout in the market."
In comparison, Norton Rose's strategy is seen as more measured, combining the attraction of an open partnership track with a targeted attempt to fill in gaps left by senior departures, notably in banking.
Likewise, as reported recently by Legal Week, Norton Rose is keeping a vigilant eye on profitability, with the firm this year pioneering a 'partnership academy' for its UK corporate promotions.
The initiative ushers in a £750,000 business-generation target for partnership candidates, together with additional training in client relations and more formal feedback. The firm, which concedes that promotions must not be dilutive, intends to extend the model to include all UK partner-ship candidates from next year.
Norton Rose chief executive Peter Martyr comments: "We are starting to grow organically across the international network, which is a sign of the network maturing."
The danger for Dentons is that its largesse will be viewed as a defensive strategy and prove ultimately difficult to sustain.
Set against that, even the firm's critics acknowledge that some of its departures in recent years have eased a log-jam built up in its partnership and given some genuinely impressive senior associates better prospects for promotion.
It is also acknowledged that a handful of firms have made a virtue of a more open partner-ship track in recent years, notably DLA Piper Rudnick Gray Cary and Simmons & Simmons.
The secret of that success appears to be maintaining associate morale while attracting quality senior associates who have suffered from the equity clampdown at the magic circle, though usually not directly to partnership.
Dentons remains bullish, arguing that the level of promotions is evidence of a business well into recovery rather than a sign of desperation.
Chief executive Howard Morris comments: "This may send out the message that if you are a talented lawyer, you have a future with us, but that is not the reason we are making people up."
Bold words, but Dentons has a tough challenge. Promoting so many means the firm must maintain robust growth for several years, or suffer a sharp fall in profits. It is also not a tactic the firm can credibly play twice if results are not immediately forthcoming.
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