Magic circle firm Allen & Overy is to cut up to 82 partners and up to 200 lawyers and freeze pay for all employees as part of a wide-ranging, £44m restructuring programme. In total more than 240 A&O jobs in London could go.

The firm said today it will cut 47 partners globally – 9% of its partner headcount. Another 35 partners may be asked to leave, ‘subject to equity adjustments’. Around half of these cuts will be made in London. The firm will also cut 9% of its associates and other fee-earners globally – around 200 lawyers – with around 100 likely to be cut in London. Trainees, and those with future training contracts at the firm, will not be affected, said the firm.

Other cost-cutting measures announced include a pay freeze for all employees for 2009 and a freeze on ‘headline billing rates’.

The firm also said it will demerge its private client practice into an independent firm, Maurice Turnor Gardner, from 1 May 2009. Staff in the private client group, with the exception of trainees, will be at risk of redundancy.

Around 200 support staff also face the axe, with around 100 London support roles at risk.

Wim Dejonghe, global managing partner, said: ‘In the rapidly changing environment in which we operate, there is simply not enough work to keep all our people sufficiently busy and we do not see that changing. We have reluctantly taken the difficult decision to act now, from a position of financial strength, so that we can offer better terms to our departing people than might otherwise be the case.

‘We must act decisively to get the business to the right size, with the right skills, in the right places and minimise the need for any future similar announcements. Our priority is to minimise the impact on the morale of our remaining people and continue to serve our clients well.’

The cost of the restructuring, forecast by the firm to be £44m, will be paid out of cash reserves.