This warning should have sent goosebumps through the glass offices and dealership bunkers of thousands of highly paid lawyers.
Like Allen & Overy is one of five British "magic circles" law firms — announced a $3.4bn (£2.7bn) transatlantic collaboration with New York-based Shearman & Sterling, it said City lawyers should start providing «more for less».
The deal, which requires the approval of the partners, aims to create one of the world's largest law firms, with around 4,000 lawyers worldwide. 49 offices worldwide.
Wim Dejongey, Senior Partner at Magic Circle Allen & Overy said these are the two firms that are «leading in terms of efficiency.»
Earlier this year, Shearman announced it was cutting jobs to improve its profitability, while Allen & Overy recently worked on an artificial intelligence bot designed to save employees time.
Dejonget dismissed talk of further layoffs after the deal. «This is not a plan,» he said, adding, «It's really about growth and opportunity more than anything else.»
However, this comes at a time of general horror that years of growth and wage increases may have finally come to an end.
The demand for legal expertise has been so great that graduates joining elite firms right out of university, trusted only to move files from one room to another, can earn a salary of over £170,000.
However. , many players are now gearing up for what is likely to be an extended period of less work. Concerns about the global economy have led to a slowdown in closing deals that many companies, especially in the US, are struggling to manage.
Senior partner Wim Dejong said that Allen & Overy and Shearman «are leading the way in improving driving efficiency»; Credit: Allen & Overy
Shirman is not alone in cutting jobs. Other US carriers including Kirkland & Ellis and Goodwin Procter have also cut back on staff in recent months.
This has even begun to seep into London, where firms are generally reluctant to lay off employees, according to insiders.
US law firm Dechert earlier this month announced job cuts worldwide, including the opening of a redundancy consultancy in London to bring headcount in line with demand.
Allen & Overy and Shearman are determined to strike a bullish note.
Dejonget brushes off broader concerns about a market slowdown, saying the deal «will actually allow us to grow faster in terms of earnings.»
But when the two firms finally get the go-ahead for the deal, which is expected to close in six to twelve months, the question will be whether the global economy will look more stable.
If not, experts say executives may face pressure to find more efficiencies and eliminate any duplication.
Charlie Harvey, a former lawyer for Magic Circle Slaughter and May and current director of Stephenson Executive Search, says consolidation often leads to overestimation of how many employees required.
«Maybe fire some employees?» he says.
“Are they going to realize that there are too many [employees] or areas where they need to cut them in order to make them manageable?"
This comes against the backdrop of what experts say is becoming an increasingly challenging market for job hunters in the legal industry. It is believed that many major UK law firms have effectively put hiring on hold to try and contain their costs.
Harvey says these companies have only attracted «a few exceptional niches or replacement lawyers who have recently quit.»
Data from Codex Edge's Atlas, compiled by The Lawyer, shows that the number of employees, the number of moves between private Practices fell from 1,400 in October last year to 745 in March and 394 last month.
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Separate data from Adzuna shows that the number of advertised vacancies in the legal sector was 16,807 last month. month, which is almost 20% less than the previous year.
Meanwhile, employees at the largest firms may find it harder to move up the corporate ladder. Partner opportunities are expected to be more competitive than ever.
How Allen Overy Sherman Sterling makes these decisions will be closely monitored.
Pay is expected to become another area of scrutiny amid growing pressure on law firms to keep their clients' fees from going up.
Dejonget said clients who also worked with Shearman were «very enthusiastic» about the deal. the teams have been aligned with each other so as not to grumble about the difference in wages.
“Hours of work should increase. for the British or a pay cut for Americans, and neither is easy to sell,” he says. «Honestly, this deal doesn't change anything,» he adds.
Similarly, he says bonuses are already an area where Allen & Overy has been navigating for years.
Magic Circle Allen & Overy lives at the Broadgate campus in London
“We need to be able to offer competitive wages and working conditions in each of these markets [in which we operate], and it's not the same in, say, Budapest as it is in New York,” he says. «Our philosophy has always been to be at the top of each of the markets in which we operate.» there may be pressure to align all directions.
“American firms tend to follow the principle of 'eat what you kill' structure',” explains Harvey.
“If a partner contributes a lot of work and does all that work, he makes a lot of money.
“While UK firms are traditionally fixed model, so you get paid based on your seniority, not your job.» Any pressure in the future to adopt a more American way of working throughout the firm, Harvey said, “will have a big impact on the culture.”
The US is “a little bit more edgy. and people are hoarding their jobs a little more because they're more concerned about their own personal efficiency.»
While there may not be immediate job cuts, the cold that lawyers are experiencing is unlikely to pass soon.
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