Simmons bids to revive profits with partnership restructuring
Simmons & Simmons is restructuring its partnership in an effort to boost profitability, with around 10% of the firm's equity to be affected. Around 12 equity partners are likely to either be asked to leave the firm altogether, to step down from the equity, or will receive a formal warning for underperformance.
February 16, 2012 at 07:03 PM
3 minute read
Simmons & Simmons is restructuring its partnership in an effort to boost profitability, with around 10% of the firm's equity to be affected.
Around 12 equity partners are likely to either be asked to leave the firm altogether, to step down from the equity, or will receive a formal warning for underperformance.
In addition, a further five salaried partners are likely to be cut. More than half of the equity partners are based in Simmons' City headquarters, with the cuts spanning a range of practice areas including corporate.
A final decision is expected imminently on how many partners will leave, with a small number understood to be offered the chance to stay on as salaried partners, although they will receive no compensation for their de-equitisation.
Those leaving the firm will serve a three-month notice period and receive approximately one year's pay as compensation. This comes after Simmons last year removed a provision in its partnership agreement which entitled all restructured equity partners to a fixed sum of £400,000 on departure.
Managing partner Jeremy Hoyland is leading the restructuring alongside a small team of non-lawyer managers, with the overhaul coming after Hoyland and senior partner Colin Passmore last year set out boosting profits as a key strategic priority following their election. The initiative has been kept largely under wraps, with many partners unaware of the extent of the cuts.
There is not thought to be an official goal for profits per equity partner (PEP); however, partners at the firm have suggested Simmons should be aiming to increase PEP to £750,000 within the next two years in order to compete with key rivals. Its PEP stands at £460,000, having dropped from a peak of £647,000 in 2007-08. Simmons currently has around 210 partners split equally between equity and non-equity status.
Hoyland warned partners in October that performance would be more closely monitored, in particular partners' client relationships, with all partners expected to work with at least some of the firm's 100 key clients. The firm has also tightened exit terms for both those opting to go and those asked to leave.
However, while Simmons has seen a high number of partner exits in recent months – with more than 20 partners leaving since October 2011 – partners at Simmons stressed the firm is keen to grow in some core areas. These include finance and corporate, where it wants to build on its capacities in equity capital markets, M&A and private equity.
One partner said: "We are trying to recruit and are recruiting pretty extensively. In Simmons terms, we have actually had quite a lot of people joining in the last year. We are looking particularly in Asia, as is everybody else."
In recent years, Simmons has invested in Asia, including launching in Beijing in 2010, while it also secured an alliance in Saudi Arabia in May last year. However, the firm is currently making a number of redundancies in its Middle East practice in an effort to reduce its cost base.
Simmons five-year revenue and PEP overview
2006-07: turnover £250m, PEP £532,000
2007-08: turnover £290m, PEP £647,000
2008-09: turnover £291m, PEP £520,000
2009-10: turnover £251m, PEP £461,000
2010-11: turnover £243m, PEP £460,000
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