Hogan Lovells is set to offer marquee lateral hires above-lockstep pay deals as part of ambitious plans to dramatically expand its City M&A practice.

The strategy is intended to underpin the firm's commitment to upgrade the merged entity's corporate practice in the City without being restricted by legacy Lovells' lockstep.

The firm's management has decided to push ahead with the plans immediately – 18 months before legacy Lovells is due to align its 10-year modified lockstep with its US merger partner's merit-driven pay model.

The highest earner at legacy Lovells made £830,000 for the 2009-10 financial year, against average profits per equity partner (PEP) of £663,000. Legacy Hogan & Hartson's PEP stood at $1.1m (£708,000).

Although management has not decided how far above the top of the equity it is willing to go, legacy Hogan & Hartson pays its highest earners approximately 15 times as much as its lowest-earning partners, while the equivalent ratio at legacy Lovells stands at 2:1.

One partner at Hogan Lovells said: "On the one hand, this enables the firm to attract good people with the potential to transform the London corporate practice. It does, however, bring problems with it – the firm will be perceived as having a blank cheque, which is not ideal."

Legacy Lovells overhauled its lockstep, which currently runs from 30 to 60 points, in 2006, bringing in powers to move underperforming partners down the equity or freeze their progress. However, plans to allow management to bring in laterals outside the lockstep range have been abandoned several times previously.