DLA Piper International partners have approved an overhaul of its pay structure, introducing a points-based remuneration system and a larger bonus pot as it targets greater profitability, while bringing in a separate lockstep for new partners while they grow their practices.
Partners from the international LLP of DLA Piper, covering offices in Europe, Asia-Pacific, the Middle East and Africa, voted in favour of plans to bring in a points system as the firm moves towards a reward structure based on profits. While 75% of the partnership vote was required to implement the changes, 94% approved the plans in January.
DLA Piper will introduce a banded system where partners are assigned points matched to a profit share. The band extends at the top so that only the best performers can enter the highest-paid bands. This moves the firm away from a less standardised process, where partners are currently handed an annual payment based on performance over the year.
Co-chief executive Simon Levine (pictured) said: ‘The benefit of a structured points system is that it brings clarity and order to your partnership remuneration system. Rather than everyone being on their own deal, with 500 different types of structure, you have a set amount of bands. It’s a meritocracy but with a level of order, like in a lockstep. The difference is that you don’t automatically go up for every year you’ve been with the firm, you go up or down based on performance.’
As part of the proposals, DLA Piper’s international LLP will also introduce more flexibility to its bonus system, with the bonus pool shifting from 5% of the group’s profit to a range of 4-8%. There is no maximum placed on what star performers can be paid in bonuses.
A mechanism has also been brought in to end the fluctuation of take-home pay for new partners. A mini-lockstep has been introduced whereby newly promoted partners will move up a band a year for their first three years in the partnership.
Levine explained: ‘We are very keen to give our new partners comfort and support as they look to build their business. It’s a massive statement from the firm, and a testament to the partnership, that we want to nurture and support our senior associates to partner and beyond. We’re trying to build a culture that makes people want to remain here for the long-term.’
‘This is the biggest change to the firm’s remuneration in recent history. We’ll have a structured points system that enables partners to clearly see the link between billing collection and what they take home. It’s not an artificial profit share as if you’re an employee. You’re a part-owner of the business. You can explain to partners how much an investment will cost per point so they can see the level of investment they are agreeing to. You can also focus more heavily on profitability. People obsess about turnover and, while turnover is important, what ultimately matters is profitability,’ he added.