Continuing pressure on UK legal market threatens largest redundancy levels since 2009
The level of legal redundancies this year is on course to be the largest since 2009 as the number of law firms announcing job cuts grows and senior partners predict tough months ahead.
CMS Cameron McKenna, which launched a review of its UK and Central and Eastern Europe business in January, last month took the final decision to make 37 staff redundant. The news came as 330-lawyer, top 50 UK firm Trowers & Hamlins also announced in late May that seven employees – three secretarial staff and four fee-earners – had been made redundant, with the firm blaming continuing pressures on the UK legal market.
Other firms to have concluded redundancy programmes this year include Olswang, which announced in March that three lawyers are to be made involuntarily redundant, and Clyde & Co, which laid off eight support staff.
Elsewhere, Berwin Leighton Paisner (BLP) last month became the latest top 20 UK firm to enter redundancy consultations. The 727-lawyer firm announced in mid-May that it was in discussions to make over 100 staff redundant, including 58 fee-earners.
Other consultations to have been announced in recent months include Osborne Clarke (OC), which is looking to make up to 13 fee-earners redundant as it began a two-week consultation and Eversheds, which currently has 166 jobs under review. OC managing partner Simon Beswick said in mid-May that the 400-lawyer firm would be informing associates affected by the consultation.
‘We have had to take an extremely difficult decision in putting up to 13 of our UK lawyers at risk of redundancy,’ Beswick said. ‘We have had a structural over-capacity in the business at associate and senior solicitor levels for a while now. We had hoped that this issue would naturally unwind but over the past few months it became clear that this would not be the case.’
Meanwhile, Hill Dickinson – unusually for a firm that has averaged 10% growth over the last five years and posted a 22% leap in profit per lawyer in 2011/12 – in April announced a review of its UK business, which could lead to redundancies.
And national firm DWF, which acquired Cobbetts from its administrators in a pre-pack deal earlier this year, launched a redundancy consultation in its Scottish offices. It is anticipated that 12 roles in total could be affected, with 15 people potentially at risk in Edinburgh and 12 in Glasgow.
DLA Piper this year closed its Glasgow office, making 51 staff redundant, although the firm would not specify how many of those were fee-earners.
At BLP, the redundancies come in the wake of a sustained period of global expansion at the firm, with recent office openings in Beijing, Dubai and Hong Kong and lateral hires including corporate M&A heavyweights David Barnes from Linklaters and Alan Paul from Allen & Overy (A&O). Elsewhere, A&O lawyer Nomita Nair and Kyle Davis from Akin Gump Strauss Hauer & Feld joined in Singapore and Moscow respectively, while Mark Chan joined BLP’s Hong Kong office from O’Melveny & Myers.
Although the past year has seen BLP consolidate its investment, according to one former partner the firm expanded too quickly.
However, Neville Eisenberg, who was last year elected for a fifth term as managing partner, said: ‘As announced last year, we have been in a period of integration and consolidation after a number of years of high growth and investment. The decision to review a number of roles across our London office is part of a general review of our business to ensure that we are well positioned for the future.’
The firm’s last redundancy round was in 2009, when it cut 85 jobs in corporate, finance, real estate and support functions.
According to a number of senior partners, the prevailing economic climate and increased competition means that the second half of the year is likely to see further redundancies. A real estate partner at one top 50 firm said: ‘I wouldn’t be surprised to see more redundancies this year. But it’s more likely that more firms will go under.’
And the former managing partner of a top 50 firm added: ‘For those firms who failed to find a suitor last year, they will find it incredibly tough. We’ve already seen a couple of failures, it wouldn’t surprise me to see more.’