With Magic Circle rivals Clifford Chance, Allen & Overy and Freshfields Bruckhaus Deringer having recently remodelled their remuneration structures following pay pressure from more profitable US firms, Linklaters has plans of its own.
Gideon Moore, who became managing partner of Linklaters at the start of the year, is currently drawing up proposals to put to the partnership next month.
While the firm has yet to finalise its plans, current indications are that Linklaters is considering the use of discretionary gates and more flexibility to move partners around its ten-year lockstep.
Linklaters currently has a relatively pure lockstep model running from 10-25 points, with country variable ‘discounts’ used in some foreign markets like Germany and Belgium (respectively equivalent to 90% and 70% of UK partners).
According to one senior partner the firm is considering bringing in a gate around the eighth year of progression and making it easier to move partners down the ladder, with a review triggered five years after the top of the equity has been reached.
Like many London firms, Linklaters has been affected by predatory raids from US law firms, while the compressed and rigid nature of lockstep makes it hard to operate profitably in many foreign jurisdictions.
Current indications are that Linklaters is less focused on ushering in ‘super-point’ deals above its core equity ladder to attract and retain high performers as the model has been divisive when used by City rivals. A more consensual approach would allow Linklaters to increase profits-per-point and operate more flexibly.
Top of equity partners pull in around £1.86m, with profit per equity partner currently £1.4m.
One Linklaters partner commented: ‘It’s maths. It will be consensual when people move down. It’s a good thing, people need to manage their careers and, if anything, this will extend the careers of many people. The only tool we had before was to restructure when too many people got to the top of equity.’
Moore (pictured) said: ‘We keep our partner profit-sharing arrangements under review to ensure that they remain appropriate. Lockstep is part of our DNA and underpins our culture. We are considering some adjustments to our current model and a proposal is under development.’
Read more on the new leadership in the feature: ‘Rain men – goodbye Harvard Kool-Aid, hello plain speaking at Linklaters’ c-suite‘