Elliott and Davies acknowledge tensions at partnership meeting

Linklaters' senior leadership team used the firm's annual partnership meeting last weekend (20-21 April) to apologise for the way its controversial partner restructuring was handled and to confirm final details of the numbers affected.

Senior partner Robert Elliott and managing partner Simon Davies (pictured) both gave speeches at the conference – held in Montreux, Switzerland – acknowledging recent internal discontent. The tensions resulted in Davies initially failing to achieve the 75% majority vote required to secure re-election due to partners abstaining in protest at management decisions.

Davies told partners his failure, despite being the only candidate standing, had 'stopped him in his tracks' and prompted him to think about how he was managing the firm. 

Senior partner Robert Elliott, meanwhile, apologised on behalf of the board for the way the law firm's third major partner restructuring in a decade – which Legal Week revealed in December – had been handled and communicated.

The magic circle firm's management also informed partners of the final outcome of the restructuring, confirming that 41 partners worldwide were affected. Of this figure, 25 were asked to leave the firm altogether, with the remaining 16 either stripped of their equity status or, in the case of some senior partners, asked to take a reduced profit share. 

In addition to confirming Davies' re-election, partners also discussed the lockstep review kicked off in August last year by insolvency partner Richard Holden.

While ideas under consideration had included a US-style tapered lockstep, which would have seen senior partners' equity points reduced over time after reaching the plateau, the firm has decided not to make any changes. However, Linklaters will push ahead with plans to expand its salaried partner rank, moving away from previously stated ambitions to head closer to an all-equity partnership.

One partner commented: "The mood at the conference was rather more sober than usual. Everyone acknowledged that the internal angst surrounding the restructuring needed to be addressed – it was undoubtedly the right time to bring all the partners together."

As reported earlier this week (23 April), partners also voted on an exclusive alliance with Australia's Allens Arthur Robinson, which will take effect next week (1 May).

The deal, which will see the pair maintain separate profit pools, includes a joint venture (JV) in Asia covering energy, resources and infrastructure projects work, as well as a JV in Indonesia.

Linklaters has not made any financial commitments to the alliance, although there will be a shared profit pool in Indonesia, and the energy JV will see Linklaters and Allens share costs associated with expanding the practice and share revenues. The Australian firm will pay for its global rebrand as Allens, with the firm using Linklaters' logo on its branding.

One Linklaters partner said: "Allens will benefit from the deal in terms of brand awareness but for us this doesn't have much of an impact. Linklaters will continue to keep its financial commitments to a minimum."