It's your twentieth birthday and you're flush with cash. How do you mark the occasion? If you're the London office of Kirkland & Ellis, you recruit the City's pre-eminent banking partner.

When it hires, the Chicago-born firm tends to go big. The signing of Weil Gotshal & Manges' London banking head Stephen Lucas – a lawyer described by one new colleague as "a genius with boundless energy" – comes in the wake of several marquee appointments in the last year. First came former SEC enforcement director Robert Khuzami. He was followed by two of Simpson Thacher & Bartlett's biggest hitters: M&A rainmaker Sean Rodgers in New York and Andrew Calder in Houston.

With each hire the market was abuzz with speculation on the market-shattering compensation packages offered. Sources close to Calder's move say he has been guaranteed $5m (£3m) per year for the coming three years, in addition to a $1.5m (£890,000) upfront payment. Lucas was already on a similar figure at Weil. 

How Kirkland can do this is no secret: it is highly flexible when it comes to pay packages at the top, and, on average, awards equity partners more than seven times the pay of its salaried partners. The firm also promotes more associates to these junior ranks than any other, and then gives them four to five years to make equity partner, or up sticks.

This group – comprising more than half the partnership – is charged out at higher rates than senior associates at other firms, and contributes to a huge portion of Kirkland's profitability.

However, each year a large number of Kirkland partners – invariably drawn from those ranks – leave the firm. "The legal press often assumes something must be wrong," says one partner. But apparently the press is wrong: they're not leaving as much as being told to go.  

It may sound like a harsh environment, but there are two things to consider: this is a model of which Kirkland is unashamed, and one its junior lawyers enter with eyes wide open.

There are potential pitfalls, however. For one, ex-salaried partners speak of the boundaries to sharing and fully developing client relationships in the face of protective equity partners. For those who make inroads to building a practice of their own, the handing of umpteen shares to the next Stephen Lucas might then feel like a kick in the teeth. And for the big hires in question – as with any partner or employee – once you promise big money, it can be difficult to think about reducing it.

An upcoming test of this will come in the Hong Kong office later this year, when a number of the senior partners who joined in 2011 are set to have three-year sweetened pay packages reviewed.

The eight partners, including former Skadden Arps Slate Meagher & Flom Asia corporate co-heads Nicholas Norris and Dominic Tsun and ex-Latham & Watkins vice global corporate chair David Zhang, were hired with the mandate to make Kirkland Hong Kong the lead adviser on private equity, public M&A, capital markets and debt finance work.

Also in that group is former Allen & Overy partner Ashley Young, who is heading to Kirkland's City office to work with Lucas in a push – as one partner explains it – to "corner the leveraged finance market in London". 

To some it will be seen as another challenge to Weil, with both firms already having built up private equity, restructuring and funds groups in a relatively short time.

Expansion is due in other areas. The London office has recently signed a deal to take up more space in the Gherkin, extending its lease until 2023. It is unlikely much of that space will be occupied by share partners, but, for every new blockbuster hire, it could be harder for the salaried partners to maintain a belief in any long-term future at the firm.

Or perhaps Kirkland's genius is that it really does put customers above all else. Earlier this year, having asked two major City office clients how it could win more work, the firm's management was reportedly told: "Hire Stephen Lucas." For this to be a true success, the real losers will need to be the likes of Weil and company.

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