Allen & Overy (A&O) is reviewing equity points for partners in Germany, following a gruelling few years which saw a shift to corporate from a declining banking business.
The proposal, reported to amount to a 15% reduction in equity points but still under discussion, will be an unwelcome development among partners in the firm’s Frankfurt, Hamburg, Düsseldorf and Munich offices. It comes after unease bred from the firm’s previous restructuring led to a number of high-profile departures in 2018, including Frankfurt global head of employment and benefits Tobias Neufeld and German dispute resolution head Daniel Busse, who both set up their own boutiques.
A spokesperson for A&O said: ‘We, like every lockstep-based firm, manage and review our financial performance on a regular basis. This is essential to our success. Discussions are taking place internally. Due to our significant restructuring in 2017, we expect any changes to be relatively minor.’
A&O will require significant financial clout if it is to make good on plans to accelerate investment in its US practice in the wake of its failed merger with O’Melveny & Myers. The tie-up fell over last autumn after marathon negotiations that rumbled for more than 18 months.
Since then, the firm has had mixed fortunes in its stateside strategy, adding US capability in London in the form of financial services regulation counsel Knox McIlwain as a partner from Cleary Gottlieb Steen & Hamilton in September, while the following month losing New York leveraged finance partners Alan Rockwell and Michael Chernick to Shearman & Sterling in New York.
The aborted deal also caused some corporate partners to shop around at US rivals, with the departure from London of respected corporate partners Simon Toms and George Knighton to Skadden, Arps, Slate, Meagher & Flom just 10 days after the merger collapsed seen as collateral damage.
Meanwhile, election fever will have taken hold in London with all eyes on whether senior partner Wim Dejonghe will beat out competition from Philip Bowden, the City giant’s well-regarded banking co-head.
More hotly-contested is the managing partner spot after Andrew Ballheimer said late last year he would retire from A&O at the end of his current term on 30 April 2020. The London candidates are global head of projects Gareth Price and litigation head Karen Seward, two high-profile figures who will be considered serious propositions. Vicki Liu, the managing partner of Hong Kong and APAC and regional head of banking, has also thrown in, as has Dirk Meeus, the Belgium managing partner and co-head of global corporate in Brussels. All of the candidates are said to have bought into A&O’s need to invest heavily in the US as pressure heats up to secure its place in the global elite before it is too late.
