Arch rivals consider moves to modify strict lockstep models

Freshfields Bruckhaus Deringer and Linklaters are considering plans to overhaul their partner remuneration structures, with both firms looking at ways to reduce the number of partners at the top of their respective locksteps.

Freshfields, which until now has operated a pure lockstep with no powers to move partners up or down the equity, is in the early stages of talks with partners about modifying its system.

Partners within the firm have cited the top-heavy balance of the lockstep as an area of concern, with modifications being discussed including giving senior partners the opportunity to take a five or 10-point reduction in their share of the profits in exchange for a reduced working week. This also ties in with plans to promote flexible working at all levels.

The review, which comes as it emerges that Freshfields has also extended the bottom of its 12-year lockstep so that it runs from 17.5 points to 50 across all of its offices, could also see the firm looking at ways to better reward strong performers.

Freshfields' consultation comes as magic circle rival Linklaters holds similar discussions within its own partnership. Incoming senior partner Robert Elliott included a review of partner remuneration as part of his manifesto, with ideas on the table including a US-style tapered lockstep that could result in more senior partners seeing their equity points reduce over time after reaching the plateau.

The firm, which currently operates a pure lockstep running from 10-25 points, has yet to issue proposals to the partnership, but other ideas suggested by partners include creating different equity ladders for different regional offices. Such a move would reverse the firm's drive in recent years to create an all-equity partnership that is aligned across all offices.

One Freshfields partner said: "These will only be minor adjustments to the top and bottom of the lockstep. Even the most conservative of firms need to adjust to the market, and in order to be able to compete with more progressive US firms, changes need to happen."

A Linklaters partner added: "A modified system where partners would move down slightly after reaching the plateau would erase the stigma and increase flexibility in terms of remuneration."

Linklaters declined to comment. Freshfields refused to confirm the review. A spokesperson stated: "We are, and plan to remain, a lockstep firm."

For more analysis, see Lockstep 2.0 – time to upgrade a trusty model.