Top law firms sack 86 secretaries as earnings slide

Two of the world's richest law firms have sacked 86 secretaries in a move that signals the end of record boom times for the legal profession.

Clifford Chance, the world's biggest law firm with a turnover of £1bn, has cut 55 secretarial posts before reporting a slide in profits while one of its main competitors, Allen & Overy, made 31 redundancies just before a similar drop in solicitor earnings.

City law firms have recorded year-on-year increases in turnover and profit in the past five years. But now, faced with a much harsher economic climate, many of the top firms have embarked on spending and cost reviews with some choosing to cut jobs at the lower end of the pay scale.

While secretaries are on salaries of about £25,000, the firm's top partners can command earnings of as much as £1m a year.

Clifford Chance confirmed this month that average earnings per partner for the past year had dropped from £721,000 to £714,000. At Allen & Overy, average earnings fell to less than £700,000, but the firm has confirmed that its most senior partners will still get £1m a year.

Profit and turnover results published this month confirm that the continued global lull in corporate activity has drastically slowed growth of Britain's biggest law firms.

Revenues in 2001-02 showed an average growth of 16.75 per cent, partly boosted by international expansion, against 42.5 per cent the previous year.

Likewise, profitability dropped by an average of 7.75 per cent compared with a rise of 14 per cent in 2000-01.

Cutting secretarial jobs rather than posts occupied by some of the highest-earning partners is not only bad for the firms' images but has an adverse impact on morale.

"Lawyers have close relationships with their secretaries and feel guilty when they are sacked," a senior legal recruitment expert said. "If these firms are cutting costs then they should also be seen to look at the partner deadwood in the higher echelons of the business."

Clifford Chance, which has cut 10 per cent of its secretarial staff, denied that the cuts were linked to what it described as a "marginal" fall in profits.

Its London managing partner, Peter Charlton, said: "We naturally regret these redundancies, and we wish all those leaving the firm the best in their future careers. Our aim now is to establish the systems, training, career path and support necessary for our legal support secretaries to provide the outstanding service necessary in today's tough markets."

Allen & Overy, which had 400 secretarial staff before its first round of support-staff reviews, said its cuts were aimed at improving performance rather than saving money. The cuts followed tests that helped identify secretaries who did not meet the firm's requirements.

But Rodney Barker, the firm's former director of business services who is leading the review, conceded that Allen & Overy was overstaffed with secretaries. "Better trained people and better management really means we need less of them," he told Legal Week, a trade magazine.

Traditionally, law firms have been reluctant to let go of lawyers because of the training they have invested in them.

Peter Bracken of Whitehead Mann, a leading London executive search company, said that law firms were toughening the conditions for those lawyers who aspired to joining the equity partnership, which pays the biggest earnings. "Law firms are beginning to insulate themselves against the economic downturn. Pressure on profits and turnover is now affecting their businesses for the first time for many years. But because it is still difficult to recruit specialist lawyers they don't want to lose them now and then face being under-resourced when the market picks up," he said.

Not all secretaries made redundant are prepared to go quietly. In March, an employment tribunal awarded Wendy Macfarlane £20,000 after she was made redundant in 2000 from Bates Wells & Braithwaite, a charity-law specialist. And earlier this year, a secretary was paid up to £10,000 after she claimed sex and race discrimination against the London solicitors Charles Russell.