Law firms have usually been able to insulate themselves against the chill winds of the economy by gearing up their litigation, insolvency and employment departments.
But what has caused surprise is a new tendency to announce formal redundancy programmes – uncharted territory for many firms who traditionally prefer to usher unwanted lawyers out of the back door with a cheque and a confidentiality agreement.
Dan Wilkins, a specialist legal recruiter at Hays ZMB, says: “In the late 1990s we never saw a redundant lawyer but the market has turned.”
He says law firms tend to be about a year behind the market in cutting staff but his office has now seen about 100 redundant City lawyers. “It is only a small percentage of the lawyers in London but it is a new trend,” he says.
“Firms are reluctant to be the first to announce redundancies but once other firms have done it, it becomes easier to say: ‘This is happening to us, too’. We are now starting to see that domino effect.”
Last week Jones Day Gouldens – the product of a merger between City firm Gouldens and Jones Day, the US group – became the latest to wield the axe with news that it was cutting 10 per cent of its staff, up to 25 lawyers and other staff.
That follows the biggest law firm redundancy programme in recent years announced by Denton Wilde Sapte – the firm that was the model for Trust, the television series about glamorous lawyers – which is letting about 70 staff go. Meanwhile, SJ Berwin has said it will lose 16 jobs and Charles Russell has cut 19. Other firms making cuts include Berwin Leighton Paisner, Osborne Clarke and Stephenson Harwood.
Some of the big guns of the so-called “magic circle” of five leading firms have been affected too but they have chosen to encourage individuals to look elsewhere rather than making redundancies. Mr Wilkins says many firms would often tell unwanted lawyers to “sign these documents, keep schtum and we’ll write you a nice cheque”.
Clifford Chance, the world’s biggest law firm, is undergoing what it calls “headcount management”, while Linklaters readily admits to managing the “attrition rate” of its assistants, as lawyers who have not yet made partner are known