Linklaters to push Germany to full equity status
Linklaters has reaffirmed its commitment to handing its German partners full equity status despite fears the move could force the firm to cut back its national partnership.
July 25, 2007 at 11:35 PM
2 minute read
Linklaters has reaffirmed its commitment to handing its German partners full equity status despite fears the move could force the firm to cut back its national partnership.
Linklaters management pledged this week to phase out the country weighting it uses for its German partnership as it emerged that the firm has already once formally postponed its long-planned integration process.
The 'interim' arrangement – which was highlighted this month when Linklaters was fiercely criticised for disclosing its profits per equity partner (PEP) without reduced-earnings partners – has been in place since Linklaters' 2001 takeover of Oppenhoff & Raedler.
Including all its equity partners would have reduced Linklaters' quoted profits since 2001 by around 10% – in 2006-07 reducing its PEP from £1.294m to £1.15m.
Linklaters managing partner Tony Angel refused to comment on a timeframe for integration. However, he told Legal Week: "We have come a long way in Germany but we still have a way to go to achieve the profitability we want. We are committed to bringing German partner remuneration into line with London at some point in the future."
The firm refuses to comment on the formula used in Germany, but lawyers familiar with the model said equity partners start on 7.5 equity points rising to a maximum of 20, against a London range of 10-25.
The issue is particularly sensitive for Linklaters in Germany as the practice makes up the largest chunk of its reduced-earnings partners, which averaged 145 during 2006-07.
Partners privately concede that raising German profitability has proved harder than expected, though the firm stressed that this has been partly due to recent robust growth in London.
Originally, Linklaters pledged to bring equity drawings in line with more profitable jurisdictions within five years.
Ironically, some German lawyers have said that the firm may face local resistance, amid fears that it would reduce partnership prospects.
One German partner at the firm said: "It makes no economic sense to have the same system as London. Living costs are far lower and it would also restrict the number of partners made up in Germany."
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