8/2/2019 Pages From Cityam 2012-05-01

1/1

G E T T Y

BUSINESS WITH PERSONALITY

SPAIN confirmed yesterday that ithad slipped back into a technicalrecession during the first threemonths of the year, kicking off a

gloomy start to the week as a slewof downbeat data renewed fearsover the single currency area.

Eurozone woes werecompounded by figures from crisis-struck Greece, which showed retailsales are plummeting at anincreasing rate. Greek retail sales

by volume fell 13 per cent year-on-year in February, with the pace ofthe decline picking up after arevised 10.6 per cent drop in

January.Greece has been joined in

recession by the Spanish economy,

which shrank by 0.3 per cent in thefirst three months of the yearaccording to official estimates.

Lending to companies and

individuals in the Eurozone alsogrew less than hoped in March, itwas revealed yesterday.

The wheels are very clearlycoming off, Jefferies economistDavid Owen said, predicting a verysignificant decline in the next twoquarters. Its still reasonably easy toenvisage GDP to be down about 1.5per cent this year, Owen warned.

At the end of last year theEuropean Central Bank pumped 1trillion of cheap three-year cashinto the banking sector in a bid tostave off another credit crunch inthe Eurozone. Yet loans to theprivate sector were up by an annual0.6 per cent in March, lower thanexpected suggesting that theECBs measures have not trickleddown. Overall money growth

accelerated, however, providingsome hope for the recovery.

Recession has struck Spain, where protests against austerity have broken out

LONDONS increasingly embattledlegal sector suffered a further blowyesterday, as magic circle stalwartSlaughter and May froze associatesalaries and Herbert Smithannounced 51 redundancies in itsCity office.

Only second-year associates atSlaughters will see their pay packetsrise, though by less than one per cent,while salary bands for the firmsother qualified lawyers remain static.The pay freezes at Slaughters come

on the heels of minimal rises at fellowmagic circle firm Allen & Overy,which set the scene for an anaemicround of pay hikes earlier this monthwhen it announced associate salaryincreases of less than one per cent well below the average across the pri-vate sector.

Adding to the misery was HerbertSmith, which said yesterday it wouldcut just over three per cent of its

London staff, with the bulk of lay-offsfalling in the firms corporate team.The global firm employs 700 lawyersin London, including 164 partners.

The firms management put thecuts down to a stagnant deal market,but outside sources told City A.M. thatgiven that the firm had already seenseveral departures from its corporatepractice in recent months, the redun-dancies were surprising.

We have waited in the hope thatconditions in transactional marketswould improve but against a back-drop of continuing uncertainties inthese markets, we believe now is theright time to address the issue, saidmanaging partner David Willis.Though the numbers being cut are

still a long way off the widespreadredundancies seen across the sectorduring 2008-09, there are also omi-nous-sounding partner restructuresunderway at magic circle firmsClifford Chance, Allen & Overy andLinklaters, and industry analystsexpect more to come.A study last month by RBSs legal

services team predicted that 3,000lawyers will leave the UK legal sector

this year, with a further five per centof overall headcount needing to becut in order for margins to return topre-crisis levels. The survey of 60 sen-

ior legal executives also found most tobe bearish on the outlook for the restof the year, predicting flat or fallingrevenues for their firms.

Fee income at the UKs top 100 lawfirms increased by 7.2 per cent year-on-year in the three months to theend of January according to Deloitte but this was down on the 9.8 per centgrowth seen in the previous quarter,and law firms bosses have made nosecret that theyre expecting a toughsecond half of 2012.

Im not surprised by the payfreezes, said Guy Adams at legalrecruiter Laurence Simons. Lawfirms are very cautious due to down-beat economic data, as well as pres-sure from clients who are becomingmuch more savvy about pricing.

New York firm Dewey & LeBoeuf which has 140 lawyers in London isalso proving that the US legal sector isfar from unscathed. Around 20 part-ners left the firm yesterday after aweekend that saw its chairman step

down and merger talks withGreenberg Traurig end. The firm waslast night racing to extend a deadlineon more than $75m of its debts.

www.cityam.com FREE

MAYORAL FAVOURITESGO HEAD TO HEAD INTHEFORUM

BY JULIAN HARRIS

FTSE 100 5,737.78 -39.33 DOW 13,213.63 -14.68 NASDAQ3.046.36 -22.84 /$ 1.62 -0.01 / 1.23 unc /$ 1.32 -0.01

LEGAL FIRMS

HIT BY FRESHDOWNTURN

ISSUE 1,623 TUESDAY 1 MAY 2012

See Page 16

MORE EUROZONE: Page 9ALLISTER HEATH: Page 2

Certified Distribution

27.02.2012 till 01.04.2012 is 99,462

BY ELIZABETH FOURNIER

BORISv KEN

Eurozone crisis erupts

as recession spreads

Redundancies and pay freezes return to the sector as deals dry up