Soon after Simon Davies took over as Linklaters‘ managing partner in the fall of 2007, he brought together a group of the firm’s partners for some scenario planning. Turbulence in the subprime mortgage sector hadn’t yet grown into a global economic downturn, but Davies knew that the legal services market was already changing. “We had been striving to run ourselves as efficiently as possible to deliver clear value to our clients and avoid increasing rates, ” he says. The purpose of the gathering was to run through some “ what-ifs,” determine how the firm would be affected, and consider how it would respond. Scenario three, the worst one under consideration, was the collapse of a major investment bank.

That worst-case scenario came to pass less than a year later, when Lehman Brothers Holdings Inc. imploded. The resulting contagion forced many global firms to slash head count, as they tried to compete in a world where they didn’t need hundreds of associates churning out financing documents. Linklaters axed 400 lawyers and staff worldwide (around half were in London), and other global firms cut just as deeply. Latham & Watkins announced in February that it was cutting head count by 415, while in March, White & Case revealed plans to let 400 lawyers and staff go.

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