Opinion: law firms should not be afraid to cull partners to keep rising talent
Firms have to balance pruning senior ranks with promoting new talent
July 17, 2014 at 07:43 PM
3 minute read
Since the magic circle made a series of high profile partner culls at the height of the recession, attention has been focused both internally and externally on how they – and the rest of the UK's leading firms – have been managing their partnerships.
The upshot is that while mass exits of the kind that happened in 2009 remain few and far between, firms have steadily continued to prune their ranks and their equity ever since.
And with good reason; even ignoring the fact that businesses – partnerships or not – should not be carrying underperformers taking home more than their fair share of the pie, firms quite simply can't afford not to. An ageing population means voluntary retirements and departures to other firms combined are unlikely to clear enough space to allow firms to promote sufficient junior lawyers to partner.
Legal Week's lead feature this week shows the UK's 20 largest firms saw just over 6% of their UK LLP partners leave during the last financial year through either voluntary departures, retirements or performance management – only around two percentage points more than the same group made up to partner in their latest promotion round.
Departure rates varied significantly across the firms, ranging from 11% of the partnership at DLA Piper's international LLP, down to 2% or 3% at Freshfields, Linklaters and A&O. But, on the whole, the exit rates look managed rather than brutal, given that many (perhaps too many in the case of some firms) will have been voluntary, and that most of these firms are also growing their businesses globally through lateral hires as well as internal promotions.
Of course, any de-equitisations sit on top of these departures. Even here though, only three firms in the top 20 had more than a two percentage point difference between the number of exits and the number of LLP terminations, suggesting that relatively few partners leaving their firm's LLP are staying on in some other capacity.
For those directly affected, managed exits or de-equitisations are no doubt a painful experience and it is certainly true that firms need to make far better use of experienced partners who still have much to offer in some other capacity. However, given making partner remains the stated goal of many junior lawyers (47% of the 2,500 responding to Legal Week Intelligence's annual Employee Satisfaction Survey listed it as their primary career ambition – see page 4) firms have to balance this experience with the promotion of new blood and new ideas. The latest numbers suggest they are not doing too bad a job.
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