Linklaters partners vote in favour of lockstep reform
Linklaters vote comes as CC reviews partners' positions on firm's new lockstep
November 03, 2016 at 09:08 AM
3 minute read
Linklaters partners voted to approve a package of reforms to the firm's lockstep system at its partner conference in London earlier today (3 October).
Partners voted to introduce a range of measures intended to increase the flexibility of the firm's lockstep, without going as far as introducing 'superpoints' to reward star performers.
Linklaters' current lockstep runs from 10 to 25 points over 10-12 years. Under the proposals this ladder will be doubled to range from 20 to 50 points.
The entry point to the equity will continue to depend on which country a partner is based in, with weightings based around cost of living and strength of the local legal market.
The lockstep will continue to be capped at different points depending on the jurisdiction but the new proposals give exceptional partners the chance to continue climbing the lockstep beyond the local cap. Decisions will be made on an office-by-office basis.
The reform also includes the introduction of a gate in the equity after eight years, which will apply across all regions. This will mean that all partners will be subject to a review of their performance at this point, before being allowed to continue progressing.
The eight-year gate will also allow management to look at the individual's performance in the context of a wider group of partners in the same practice or geography.
According to partners inside the firm, the aim of this is to instill the idea of a regular review of partner performance, carried out in a transparent way.
In addition, partners who have reached the top of the equity will have their performance reviewed after five years with the intention of preventing the lockstep becoming too top heavy.
Under the previous managing partner Simon Davies, several controversial restructurings of the firm's lockstep damaged the relationship between management and the partnership. The new system would aim to normalise reviews of partner performance in a bid to avoid damaging wholesale restructurings.
According to partners, there are no plans to emulate magic circle rivals such as Freshfields Bruckhaus Deringer and Clifford Chance (CC) by introducing reforms that make it possible to better reward high performing partners with above-lockstep deals.
The Linklaters vote comes as CC is in the process of reviewing some partners' positions on its new lockstep. It is understood that those sitting near gateways are being reviewed, with the process to conclude at the end of the year.
One partner at the firm said: "Every year a group of people are reviewed, but it's not like other firms where everyone is reviewed everywhere each year. The process is largely around gateway arrangements. It's going to be a relatively low percentage that is impacted. This year, there will be fewer changes than last year."
The firm's lockstep structure runs from 40 to a plateau of 100, with the option to extend this to super point levels of 115 or 130. However, in practice the firm had never gone above the top of the main lockstep, or reduced partners' points until last year, when partners voted to overhaul the structure.
The overhaul made it easier to shift partners down the lockstep or promote them to the super point tier without the approval of the majority of partners.
Linklaters declined to comment.
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