"What the bl**dy hell is going on at Pinsents?" asks one senior partner at a competitor firm.

He's referring to a string of partner departures that have occurred since the beginning of the year. Glasgow resident Chris McGarvey's move to CMS last month was Pinsent Masons' sixth departure in just four months. And for a firm that appears to have had a relatively good year, the exits have generated an unexpected amount of attention around the City.

For Pinsents loyalists, there is nothing to see here. The partnership has in fact grown by nearly 5%, they argue, with HR director Jonathan Bond claiming that total exits during the past 12 months represent just 6% of the overall partnership – consistent with the firm's "five-year norm". Simply put, it's "natural attrition", a firm spokesperson adds.

But several former partners believe the firm has yet to address fundamental issues that could have played a part in the recent exits. Those who spoke to Legal Week point to the firm's pay and culture – more specifically to a decision the firm made five years ago to jettison its lockstep in favour of a performance-based remuneration system.

Is there something deeper?

The six leavers so far in 2019 span multiple practice areas as well as the length of the country. In the space of two months, CMS hired both McGarvey in Glasgow and employment partner Steven Cochrane in the City; in March, Osborne Clarke's City base welcomed Ian Hyde, a Pinsents partner of 28 years. Eversheds Sutherland took on financial products head Tony Anderson along with a small London-based team; while Addleshaw Goddard and Penningtons Manches capitalised in the regions, hiring David McEwing in Aberdeen and Joel Kordan in Birmingham respectively.

For former partners, any moves are likely to be rooted in how the firm has managed its culture and remuneration.

Before the 2008 financial crisis, the firm's traditional lockstep comprised a points scale, wherein one point equated to £12,000. But once the crisis took hold, this figure plummeted to £8,000, stabilising some years later at £10,000, according to Bond. 

However, in 2014, Pinsents replaced its lockstep with a newfangled performance-based remuneration system – the end product of seven years' recalibration. Its model today features two distinct tiers: the lower consisting of 'fixed share members' and the upper, 'variable share members'. 

The average point is now worth upwards of £16,000, with former partners suggesting the inflation makes it that bit harder to inch up the payscale.

"I'm a great believer that pay disparity shouldn't be off the scale. But at Pinsents, the differential is very high"

The financial as well as philosophical shift has meant that partners can no longer rely on the guaranteed, incremental nature of the lockstep, whereby points are achieved simply on the basis of one's tenure. What takes its place is a system where 'variable share' partners can move both up and down the points scale following a two-yearly review, depending on performance.

Bond explains that the introduction of the new system was designed to "institute a performance culture", in which partners are "rewarded for the quality of their contribution" and not for the length of time they've been at the firm.

But both the clearer demarcation between the upper and lower limits of the pay scale and the points inflation have, according to one former partner, created a "a big disparity" in partner pay.

'A huge gulf'

"There is a frustration with the pay scale," the ex-partner argues. "I'm a great believer that disparity shouldn't be off the scale. But at Pinsents, the differential is very high."

The ex-partner makes the point that, on a scale that allows one to progress at a pace of just a couple of points at a time, "it would take you decades to achieve higher figures, and that's assuming you don't slip up anywhere".

Similarly, a second ex-partner suggests "there is a huge gulf between fixed and variable share partners", adding that junior partners might earn something in the region of £150,000, whereas those on the upper tier can achieve sums of roughly between £500,000 and £1.2 million.

"It wasn't a sustainable model and wasn't really fair"

"Internally, you might have the same work, targets and responsibilities as other partners, but that isn't reflected in pay," they continue, adding: "It's very opaque. And there's no space to progress until someone retires. It wasn't a sustainable model and wasn't really fair."

Various other partners express similar sentiments, with one pointing to internal strife where some try to "take credit for work" and "take over client relationships".

However, so long as they have "a track record of performance", Bond believes there is ample opportunity for high-performing fixed share members to progress, adding: "The actual number of people we promote has been pretty consistent."

And offering a justification for the pay differential across the two tiers, Bond makes the risk-reward argument, that variable share partners take on the greatest financial risk – he highlights that during the financial crash, "they suffered", having put more capital into the business.

He insists that at Pinsents "there is a heavy emphasis on developing our own", arguing that some of the firm's most successful partners have worked their way up. "We have a track record," he says, adding: "We're not going and grabbing laterals," and that where the firm does hire from outside, it is often at the fixed rather than variable share level.  

Rowing their own boats

Several former partners believe the performance-based metrics have negatively impacted the culture of the partnership.

They say competition among partners is prioritised over collaboration, with one suggesting that, unmoored from the lockstep, there has been a decided dimming in morale across the partnership in recent years. The former partner talks of an "oppressive", "isolationist" culture in which partners tend to "row their own boats".

In contrast, Bond believes that some of the firm's initiatives have helped the firm sidestep the problem of lawyers "rowing their own boats". To illustrate this, Bond points to the annual bonus round for fixed share partners, in which bonuses are determined not just by glowing billing numbers, but also by performance indicators such as innovation, and introducing clients to new service lines and geographies. "It's not about the quick win," he insists. 

"It's the least happy place I've been by a country mile"

But four former partners agree with one ex-lawyer's characterisation of Pinsents as the "least happy place I've been by a country mile", with partners often "institutionalised" in a climate they describe as "dour".

Responding to this point, Pinsents has provided Legal Week with the latest results of its two-yearly AON employee engagement survey, which gauges employee satisfaction against criteria such as the likelihood to speak positively about the firm or recommend joining the firm to others. It shows a partner engagement score of 70% – which, the firm says, shades the legal sector partner average of 66%. However, the firm was not in a position to provide previous years' results for an effective comparison with the lockstep era.

Pinsents also points to the fact it has grown its equity partnership, has expanded its flexi-lawyer business, and topped Stonewall's rankings of the best employers for LGBT staff. One insider adds that any discontent among former partners could be due to them getting less favourable appraisals than they had hoped for.

As a person with knowledge of the matter suggests, much of the "disquiet" over both the remuneration model and firm culture may be attributed to what they call "a disconnect between the management and others", adding that "lines of communication aren't clear". It was "not always known why decisions were made", particularly around pay and laterals, they say.

"This could be the fault of the firm, it could be the fault of the individual"

Bond concedes that it might sometimes be the case that information "hasn't gotten through". Refuting that it is a management problem, however, he argues that the firm "always tries to explain the rationale" and "the business case" for its key decisions.

While he stops short of suggesting it is an issue that management must address, he accepts that "in a big organisation, communicating is a challenge".

"This could be the fault of the firm," he says, adding: "It could be the fault of the individual."