Legal Business Blogs

Early stages: Clifford Chance kicks off lockstep review

Clifford Chance has started a review of its remuneration system at management level, a move which could see the firm deploy a more flexible lockstep to retain star partners.

A spokesperson confirmed a review was underway at the highest level but talks were at very early stages and no proposals had been put to the partnership yet.

The firm, which this year revealed its highest ever financial results to date with revenue up 7% to £1.36bn, currently deploys a single profit pool, lockstep system and partners spend three years as juniors before progressing onto the equity, which ranges between 40 and 100 units.

CC has been viewed by many as historically slow at implementing structural change, but the proposition of a more flexible lockstep by managing partner Matthew Layton as part of his election manifesto in 2013 is, to some, a welcome move.

The lockstep review coincides with the unveiling of CC’s latest strategy which will see the firm introduce fresh key performance indicators and aspires to increase US and Asia revenues to approximately 20% and 25% respectively over five years. Measures ensuring that the strategy is translated into revenue growth and higher profitability, include introducing new KPIs for partners and associates, improving profitability analysis, and gaining a greater understanding of client financials. Speaking to Legal Business, Layton said: ‘It’s a work in progress to align those metrics with client satisfaction to a greater degree with bonuses.’ 

And as one former CC partner points out, such a move opens the debate for increased flexibility within the firm’s own compensation system: ‘It could be Matthew trying to start to define criteria that will be relevant for moving people out of the lockstep or effectively awarding them extra points. The client satisfaction and business development strategy is a platform for paying people beyond the lockstep. And for a firm like CC, you want the rainmakers to go out and get business – they’re the most valuable people. This ultimately is a statement of intent of what CC is going to attribute most value to in terms of partner performance. There was a tendency to regard technical ability and business savviness as almost being inversely proportional.’          

For more on CC strategy, see ‘A statement of intent’: Can Layton’s strategy reinvigorate Clifford Chance?