Amid a turbulent period of lawyer exits and poor financial performance, Ashurst partners have voted through fundamental changes to its remuneration system in a bid to retain star partners, including a stretching of the lockstep and allocating equity share to salaried partners.
With plans emerging in recent weeks, the vote passed yesterday (1 August) with changes including adding an extra 10 points (worth around £150,000) to the top of the equity ladder, which currently starts at 25 points. The top of the ladder will now plateau at 75 points, while the bottom of the ladder will remain unchanged. A performance-based bonus pool for both equity and non-equity partners will also be brought in.
Salaried partners will receive part of their remuneration as a full equity share, although it is not clear what the ratio will be. The changes come as part of a strategy by the firm to drive high performance and collaboration.
The news follows a run of partner exits in recent weeks, including restructuring partner Diane Roberts to Reed Smith, while Latham & Watkins hired financial regulation head Rob Moulton and restructuring partner Simon Baskerville.
Following its merger with Australia’s Blake Dawson in 2013, the firm’s turnover dipped for the second consecutive year, with 2015/16 revenue dropping by £28m to £505m, while profits per equity partner fell by 19%, down to £603,000 from £747,000 during the 2015/16 financial year.
A firm spokesperson said: ‘This is an evolution of our system which gives us more flexibility to reward high performance. We have had strong support and engagement from partners throughout the process.’
Ashurst is one of multiple Global 100 firms to alter its remuneration system in recent years. Last May, Legal Business revealed Clifford Chance voted through proposed changes to its remuneration system and deploy a more flexible lockstep by stretching the top of the ladder in a bid to retain star partners. Freshfields’ partnership approved the introduction of a second tier lockstep two years ago.