Ashurst to extend lockstep and introduce bonus pool in bid to reward top-performing partners
Firm plans to overhaul partner pay following disappointing financial results that saw PEP tumble by 19%
July 12, 2016 at 08:15 AM
3 minute read
Ashurst is set to introduce a new top rung to its lockstep ladder following a review of its partner remuneration structure, Legal Week understands.
The planned overhaul, which has not yet been approved by partners, will add an additional 10 points to the top of the lockstep, taking the plateau to 75 points for star performers. The bottom of the ladder is expected to remain at 25 points.
As part of the same review, the firm is also planning to introduce a bonus pool that can be used to reward full equity and fixed share partners for strong performances in a particular year. It is understood that the firm will set aside a share of the profit pool to be used for partner bonuses.
Ashurst is also planning to award fixed share partners a greater share of the equity, boosting the percentage of their pay that is linked to the firm's profits.
The changes are intended to make it easier for the firm to reward strong performers and encourage partner buy-in at a time when average profit per equity partner (PEP) has fallen to its lowest level in more than 10 years.
Ashurst announced a 19% plunge in PEP to £603,000 and a 10% fall in revenue as a result of challenging economic conditions, exposure to currency fluctuations and investment in new partner hires.
One partner inside Ashurst said of the lockstep overhaul: "Given where our PEP currently is, we need something to reward people."
He added that the new plateau will be available only "to a very small, exceptional minority".
Ashurst's bruising set of financial results for the 2015-16 financial year also saw turnover drop to £505m, down from £561m last year.
Ashurst last reviewed its lockstep in 2007, when it brought in a super-plateau 65-point level as part of an overhaul that rebased the ladder from 20-50 points to 25-65 points, with a number of gateways.
News of the lockstep review comes as Ashurst today (12 July) added to its US ranks with the hire of infrastructure partner Andrew Fraiser from Allen & Overy.
Fraiser will join Ashurst's New York office in September, having relocated to A&O's London banking team last year. He previously spent five years in the magic circle firm's New York office from 2010.
Fraiser has experience advising public authorities, private equity investors, developers, contractors and debt providers on projects in the US and European markets.
His hire comes after a number of exits from Ashurst in London in recent weeks, with Latham & Watkins making two hires from its City base just this month.
Yesterday (11 July), Latham hired restructuring and insolvency partner Simon Baskerville from Ashurst, less than a fortnight after hiring Rob Moulton, Ashurst's global co-head of financial regulation.
In April, financial regulatory partner James Perry left for Gibson Dunn, a move that will reunite him with several former colleagues, including former senior partner Charlie Geffen. Later that month, London capital markets partner Jonathan Parry moved to White & Case.
Ashurst declined to comment on the lockstep review.
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