'All firms have gardening leave – but this is different': the Linklaters plan to restrict team exits
Magic circle firm aims to stem flow of departures as US rivals continue to target top talent
November 14, 2018 at 09:10 AM
4 minute read
Linklaters brought in new measures to prevent teams of partners leaving the firm last year, it has emerged, as top UK firms continue to grapple with the threat posed by acquisitive US rivals.
The new provisions, which were voted in at the firm's annual partnership conference in 2017, mean that Linklaters can restrict departing partners from joining a particular firm for 12 months, if the firm in question has recruited five or more of their Linklaters colleagues in the preceding year.
Multiple sources have told Legal Week that the move was motivated in part by a series of significant departures to US firms in recent years, including a run of partners who left to join Kirkland & Ellis.
Seven partners left for Kirkland in 2015 and 2016, including four in private equity (see full list below), while other departures to US firms in recent years have included Germany private equity head Rainer Traugott, Duesseldorf M&A partner Nikolaos Paschos and London financial regulation partner Carl Fernandes, all of who are now at Latham & Watkins.
The restrictions apply to lawyers who have been part of the same team in the 24 months prior to their exit, including those who may be in different offices but have worked closely together. The 12-month restriction on moving is double the length of the magic circle firm's standard six months' gardening leave.
It is understood that to date, the restriction has not been enforced, and one ex-partner told Legal Week that the only firm it would currently apply to is Kirkland.
Restrictions aimed at preventing team moves are understood to be rare at top City firms, although one recruiter told Legal Week that such measures are not unheard of.
One source close to the firm told Legal Week: "All firms have gardening leave provisions; it creates a hiatus between the departure and the new arrival, and it's more understandable – but this is different."
Other non-compete provisions were already in place at Linklaters, which mean partners cannot immediately continue working with existing clients after joining their new firm. Specifically, departing partners are prohibited from working with Linklaters clients for up to one year after leaving, if the partner has worked with said client in the preceding 24 months.
Both restrictions can be waived by Linklaters' management at the request of the departing lawyer, and it is understood that some allowances have been made since their introduction.
Another source said: "You'd expect it's not popular with clients. You shouldn't be out there restricting clients on who they can work with, and lawyers should be able to compete on merit."
Linklaters also shook up its lockstep last year, with London partners now taking a minimum of 12 years to reach the top of the lockstep, compared to 10 years under the previous system. New London partners join the lockstep at 14 points and progress by three points each year, to reach the top of the 50-point equity after 12 years.
Other measures brought in by Linklaters during the 2017 conference, which was held in Monaco, included a move away from individual financial targets for partners. Performance is now assessed by considering a broader range of factors encompassing business development, marketing and innovation, rather than a sole focus on individual billings.
Linklaters declined to comment.
Linklaters partner departures to Kirkland & Ellis, 2015-16
- Private equity partner and head of real estate M&A Matthew Elliott – February 2015
- Competition and antitrust head Paula Riedel – May 2015
- Hong Kong finance partner David Irvine – September 2015
- Head of Nordic private equity Roger Johnson – September 2015
- Private equity partner David Holdsworth and tax partner Tim Lowe – May 2016
- Private equity partner Stuart Boyd – May 2016
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