Clifford Chance votes through lockstep overhaul to retain talent
Magic circle firm adds two upper levels while under-performing partners may be nudged down the lockstep ladder
May 06, 2015 at 03:47 PM
3 minute read
Partners at Clifford Chance (CC) have voted through a proposal to shake up the upper echelons of the firm's lockstep system to retain more star talent while also nudging down under-performers.
Managing partner Matthew Layton told Legal Week in an interview in January that CC's lockstep remuneration model was one area up for change under the firm's new strategic plan, which sets out its vision for the next 10 years.
As part of the changes voted through last week, it is understood that the upper tier of the lockstep will include two additional levels at 115 and 130 points – well above the current 100-point ceiling. In addition, partners currently on 100 points could be moved down to 70.
The firm currently operates a three-tier lockstep, allowing for a higher scale for those in the US. It is understood that the equity of the whole lockstep ranges between 40 and 100 points.
The number of partners set to qualify for the two new upper rungs is likely to only be a "handful", said one ex-partner. "The reality is not all partners make the same level of contributions," he added.
Furthermore, he said he thought the new system was unlikely to see partners further down the lockstep climbing up.
A second ex-partner added that the firm already had the power to move partners down the lockstep but up until now it had rarely used it.
"It has always been available but it was never operated with any great rigour," he said. "If people got to the top they remained there. Now, they are intending to apply it with more rigour."
It is not yet clear how CC will monitor partners' performance in the new lockstep system.
"The real question is how they are proposing to monitor this," said the first former partner. "You're only going to be a superstar partner if the test makes you one."
One way the firm could assess partners' eligibility to move up to 115 or 130 points is to assess their billings, he added.
"When a really big deal comes in, taking a corporate partner as reference, they would take credit for billings," he said.
The lockstep changes come after a series of departures from the firm in Germany. The exits include high-profile names such as Frankfurt-based global co-head of private equity Oliver Felsenstein and Munich partner Burc Hesse, who both left for rival Latham & Watkins.
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