Nearly 18 months after voting through modifications to its remuneration system, Clifford Chance (CC) has kicked off a firmwide review of where partners should sit on its lockstep in a bid to curb under-performance and retain star partners.
The firm traditionally operated a lockstep system with a single profit pool, where partners spent three years as juniors before progressing on to the equity ladder, which ranged between 40 and 100 points.
Last year, CC’s partnership voted to change the structure so that exceptional performers can be moved up from 100 points to 115 or 130, while others may be brought down from the 100-point plateau to 70 points.
Managing partner Matthew Layton (pictured) is now assessing how the changes should apply to each partner’s points allocation. The process is described by one partner as a ‘work-in-progress’ that should be finalised by the end of this calendar year.
One CC partner said: ‘This should not be confused with handing out “superstar” points. It relates to the value of the points you already have. It is now a “work-in-progress” as to whom can receive what points and where people will sit on the ladder. Deciding this can be based on which practice area you sit in and market changes.’
The partner added that some plateau partners will be moved down to 70 points, although no specific targets had been mentioned by Layton as yet.
The corporate practice has been widely touted as the main beneficiary of the extra points allocation, while offices across continental Europe are likely to see their allocations fall.
Tinkering of remuneration systems has been an ongoing feature of the Magic Circle’s strategy to compete with lucrative pay packets on offer by US firms. Legal Business recently revealed that Linklaters is set to vote in November on the use of discretionary gates and more flexibility to move partners around its ten-year lockstep. Allen & Overy, meanwhile, broke its lockstep, which runs from 20 to 50 points with top of equity partners taking £1.9m, for new Manhattan hires to compete with US elite. And Freshfields Bruckhaus Deringer saw its partnership approve the introduction of a second tier lockstep two years ago. Since then it emerged the firm transferred partners in its Tokyo office to the lower tier as part of a global profit review.
On Layton’s review, CC declined to comment.