The partnership at Clifford Chance (CC) has voted through proposed changes to its remuneration system which will see the firm deploy a more flexible lockstep by stretching the top of the ladder in a bid to retain star partners.
The firm, which currently operates a lockstep system with a single profit pool, sees partners spend three years as juniors before progressing onto the equity, which ranges between 40 and 100 points. Under the changes voted through, it is understood that leading partners could be moved from 100 points up to either 115 or 130 points while other partners may be brought down from the 100-point plateau to 70 points. While described as a fairly comprehensive review intended to look at performance across all geographies, it remains unclear what criteria will be used to decide how partners will move up or down the ladder.
In January a spokesperson confirmed the firm had kicked off a review of the system – a move taken as part of managing partner Matthew Layton’s election manifesto in 2013 – at management level and the proposals finally went to a partnership vote in late April, receiving approval last Wednesday (29 April).
Internally the move towards a more meritocratic system is viewed as a welcome change with CC being historically slow at implementing structural reform and losing many of its best performers to US firms scaling up in Europe – including most recently global private equity co-head Oliver Felsenstein to Latham & Watkins.
Previous attempts made by the firm to shake up the structure of its pay model include during former chief David Childs’ second term when senior management discussed moving to a single tier partnership and losing non-equity partner status – a proposal which ultimately failed to gain support.
This latest mandate for increased flexibility coincides with managing partner Matthew Layton’s introduction of fresh key performance indicators for partners and associates in January, with aspirations to increase US and Asia revenues to approximately 20% and 25% respectively over five years, with the measures brought in to ensure greater revenue growth and profitability.
The proposals are, however, generating grumbling from some of the partnership, notably its German operations which underwent a strategic review in recent months that has already seen the departure of eight partners.