Linklaters lawyers back in the money

HUNDREDS of top City lawyers at Linklaters are set for a rise of at least 10% in pay to around £750,000 each, more than reversing last year's profits decline which followed a tumultuous two years of restructuring.

About 45 of the firm's 480 equity partners worldwide - the owners of the firm - are thought to have been 'moved on' over the past 18 months, according to one senior Linklaters source.

Around half are thought to have gone from the City and most of the rest from the firm's underpeforming German arm.

Linklaters managing partner Tony Angel has faced pressure from his high-billing dealmakers to improve the firm's profitability after overseeing a massive overseas expansion that has boosted revenues but caused profits per partner to fall. Angel said that this year profits per partner would be 'above 10% on last year - it has been a good year.'

Linklaters' profits per partner declined 8% over the year to April 2004 from £734,000 to £674,000 on turnover of £720m - unchanged on the previous year but up 80% over a five-year period, according to figures from The Lawyer magazine. This made it the third-biggest UK law firm by income but only the sixth most profitable.

First-quarter deal figures from Mergermarket show Linklaters as the top ranking law firm for European deals working on 31 transactions worth €27bn, (£18.63bn), the highest by value and number.

However, the value of all European deals in the first quarter to 23 March compared with last year halved to €90bn according to Mergermarket, piling pressure on City law firms to axe low-billing partners to lift annual payouts. Profits on average for the top firms slipped by 10% in 2003-2004, and firms are trimming growth forecasts for this year.

According to a Legal Week survey, only 48% of commercial lawyers are now expecting revenues to increase by more than 10% this year. One big billing corporate partner said: 'We have axed around 10% of the partners - but if we were an investment bank we could have been harsher and got rid of 20%.'

Up to 100 senior lawyers are expected to lose their jobs this year as firms re-examine their partnership structures after three years of decline in lucrative takeover work.

Linklaters is not alone in trimming partner numbers to ensure payouts are healthy in the face of a slowdown in European merger and acquisitions. Lovells, which turned over £377m last year, could see 25 partners leave this year. Profits per partner are expected to dive 20% to £470,000.

Earlier this month, Freshfields opened the door to easier ejection of partners. Joint senior partner Anthony Salz insists profits, down 3.5% last year to £675,000 on average per partner, will be improved by 'better client relationships'. Freshfields elected 21 lawyers to its partnership for the coming financial year but the total will fall two to 524 after accounting for those leaving or retiring.