The news that Linklaters asked six lawyers from its Lisbon office to leave the firm seems to have taken some observers by surprise. For others, however, it will reflect one of the prime problems that has been looming as a dark cloud over Portugal for some time; the country’s law firms could well be overstaffed.

Granted, Linklaters was not one of the bulky practices. After the cuts it will have 28 lawyers (six of whom are partners) in its Lisbon office. But the fact the magic circle player has taken the bold step puts more all eyes on substantially weightier Portuguese firms, historically reluctant to trim headcounts, to react to the country’s impending problems.

Indeed, this week saw the Portuguese Government ditch plans for a programme of major infrastructure projects, which was potential rich pickings for legal advisers, in a bid to slash the hefty public deficit. Amongst the projects shelved was the €4.9bn project for a new Lisbon airport.

With top projects in paralysis and the country facing a transactional dearth it is not a shock that Linklaters, with its renowned acute business acumen, should prune its personnel in anticipation. The firm has done it before and will no doubt do it again. Even so, few European law firms have chosen to cut lawyer numbers in the downturn. Instead they have preferred to take a hit on profits and try to maintain headcount.

The big question now is how, or will, the Portuguese firms respond? On paper the larger firms have always been, well, large. Some believe too large for the relatively restricted Portuguese market. The country’s biggest practice, PLMJ, claims to have around 200 lawyers. That makes it roughly the 30th largest firm in Europe. Vieira de Almeida has 150 and MLGTS 130 lawyers. That is almost 500 lawyers between the three of them, although there is no suggestion of any layoffs.

The burning issue for many Portuguese firms is whether the Portuguese economy can sustain such big legal teams. So far it seems to have managed to do so. But many local leaders have been almost complimentary of Linklaters’ move and some are now predicting similar things from bigger firms in the future. With Portugal facing a harder future than most European neighbours, none of this bodes well for Portuguese lawyers’ job security, especially after Linklaters’ rather uncomfortable precedent.