Simmons cuts exiting partner payouts in performance crackdown
Simmons & Simmons has cut the cost of managing equity partners out of the firm by slashing the compensation to be paid out to most exiting partners, with the move coming as the firm's management takes steps to crack down on underperformance. The firm has changed its partnership agreement so that those managed out will effectively receive one year's pay. The payout will be capped at £400,000, but with most partners likely to be managed out expected to be at the lower end of the equity ladder, it is unlikely the full amount will be paid out.
December 07, 2011 at 07:03 PM
3 minute read
Top 20 law firm cuts payouts to exiting partners amid crackdown on underperformance
Simmons & Simmons has cut the cost of managing equity partners out of the firm by slashing the compensation to be paid out to most exiting partners, with the move coming as the firm's management takes steps to crack down on underperformance.
The firm has changed its partnership agreement so that those managed out will effectively receive one year's pay. The payout will be capped at £400,000, but with most partners likely to be managed out expected to be at the lower end of the equity ladder, it is unlikely the full amount will be paid out.
The change, which was approved by partners earlier this autumn, removes a glitch in place over the last few years, which meant that any equity partner asked to leave was entitled to £400,000, regardless of their position within the equity.
Partners said the fixed £400,000 payout had been decided just ahead of the 2008-09 financial crisis, however, Simmons' profits per equity partner has subsequently dropped by almost 30%, from £647,000 in 2007-08 to £460,000 in 2010-11.
Partners have also approved a change that means those resigning could receive a smaller share of the merit-based part of their remuneration. The firm's modified lockstep sees 20% of total profits set aside to be awarded on merit, with partners receiving an additional three, six or 10-point bonus at the decision of a remuneration committee. The committee will now be able to reduce the amount awarded if partners resign.
The overhaul to the partnership agreement comes as Simmons' management team has sent a strong message to partners that underperformance will no longer be tolerated. The subject formed a key plank of speeches made by managing partner Jeremy Hoyland (pictured) and senior partner Colin Passmore at Simmons' annual partner conference last month (18-19 November).
Separately, but as part of wide-ranging plans to boost productivity, Hoyland recently warned partners that client relationship work will be monitored more closely, with partners expected to work with at least some of the firm's 100 key clients.
One partner said: "The general message is that senior management is less tolerant about the discrepancies in partner contribution. Simmons is a decent and collegiate firm, but there comes a point where you have to ask yourself what is more collegiate – to tolerate underperformance at the expense of the general partnership or to ensure everyone pulls their weight."
Simmons declined to comment.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllApple Subsidiaries in Belgium and France Sued by DRC Over Conflict Minerals
2 minute readDLA Piper, Heuking & Other Key Moves as German Legal Market Reshuffles Ahead of 2025
2 minute readTrending Stories
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250