Economic downturn impacting on magic circle firms

The credit crunch is biting into the Magic Circle, with Linklaters’ announcement this week that it is to cut jobs for up to 120 junior lawyers in its London office.

Trainee solicitors will not be affected, the firm said, although there could be up to 150 redundancies among support staff.

Linklaters managing partner Simon Davies said: “There have been significant changes in the financial markets and the wider economy. This has affected the clients we serve.

“We are acting now to reduce our headcount in order to meet anticipated demand. It is vital that the firm is in the best shape to meet the challenges which lie ahead. This action is taken reluctantly and after a great deal of careful thought.”

Linklaters, the second largest law firm in the world, employs more than 500 partners and 3,000 fee-earners.

Last month, Clifford Chance announced it had begun a redundancy consultation that would lead to 70–80 fee earners in its London office losing their jobs.

Allen & Overy is holding redundancy consultations in its Hong Kong office, with 10 lawyers’ jobs potentially affected. A spokesperson said the firm was restructuring the office after seven partners left at the end of last year.

On whether the firm might see further redundancy consultations, the spokesperson said: “Our approach is we can’t rule anything out, no-one here has a crystal ball.”

Freshfields Bruckhaus Deringer said it currently had no redundancy consultations planned.

The firm is running a two-week, 90-session internal communications programme for everyone in its London office, to encourage people to improve their knowledge of business areas outside their own.

A spokesperson said: “With the business landscape changing so rapidly, it is even more crucial for us to stay close to our clients, and to be able to develop our offering to meet their changing needs.”