Partner promotions across the top 10 London firms fell by 10 percent over the last financial year, according to Legal Week research, which suggests that law firms are already tightening their belts in preparation for a downturn.
The group made up 207 partners in total compared with 231 in 2007, even though across the top 50 as a whole, new partner promotions are marginally up on 2007.
The total number of associates promoted across the 47 top 50 firms to have announced their new partner promotions this year stands at 585 — a slight increase on last year’s figure of 581.
The marginal increase is helped by a number of firms, including Bird & Bird and Olswang making up record numbers of new partners, with 14 and 10 respectively. However, many leading firms reported a dip in the number of associates making the grade this year.
At Linklaters new partner numbers fell from 38 last year to 28 this year, while promotions at Lovells fell from last year’s record tally of 31 to 18. Similarly, SJ Berwin’s new partner promotions halved from 16 in 2007 to eight this year.
Bird & Bird managing partner David Kerr told Legal Week: “Despite mostly strong results this year so far, the number of partner promotions is down for a lot of firms. In a period of escalating cost bases, tightening the equity is clearly a trend and you need to have had quite exceptional growth this year to be making drastic increases in partner promotions.”
The number of partners across the top 50 stood at 9,995 on May 1, 2008, with firms promoting the equivalent of 6.1 percent of their partnership on average, with this figure decreasing to 5.8 percent for the top 10 City firms.
The figures show that despite the promotions, many firms have been pruning their partnerships over the year. On average, partnerships grew by 6.9 percent, with this figure inflated by firms such as Olswang and Field Fisher Waterhouse, which grew their partnerships by 22.9 percent and 18.8 percent respectively.
Many firms saw only limited growth in partnership size, with Linklaters and Nabarro remaining static, while at Freshfields Bruckhaus Deringer numbers dipped by just over 1 percent.
With the notable exception of Slaughter and May, which is one of the few remaining firms to operate a pure equity structure, the majority of new partners are set to join salaried tiers. And, with the future of the economy uncertain, partners are predicting that the bar to reach equity ranks will be raised.
Simmons & Simmons senior partner David Dickinson said: “The ability to meet the criteria to get promotion into equity — in most cases showing significant business generation — gets far harder in declining markets. The use of the nonequity band is now pretty universal as firms continue to boost partner profits and counteract differentials in profitability across offices and practice areas.”
Denton Wilde Sapte Chief Executive Howard Morris said: “It depends on how deep the downturn is. Law firms will want to preserve profit levels and while profits per equity partner remains a common measurement for success, some firms may be reluctant to make partners part of the equity.”