Freshfields partners vote in extended single lockstep ladder to boost pay for star performers
Freshfields partners vote overwhelmingly in favour of new single lockstep ladder peaking at around £3m for top earners
November 14, 2017 at 11:47 AM
4 minute read
Freshfields Bruckhaus Derigner is set to scrap its current lockstep system and instead introduce a new single ladder that will enable top performers to make six times more than those at the bottom.
Partners voted through the new system today (14 November) after six weeks of debate, and it will come into effect at the start of the new financial year in May.
It will see all partners joining the lockstep at 12 points, with a new top of lockstep rising to 60 points.
The core ladder will run from 12 points to 40 points, with everything above this only applying to star performers and those in competitive markets such as New York. Elsewhere, partners will climb to various points on the ladder depending on factors such as geography and practice group.
There will be three gates in the system where the firm will be able to either pause partners' progress or stop them from climbing higher. In theory, the firm will also be able to move partners down the lockstep from a gateway position, something it was previously unable to do. Only the very top performers will be able to clear the third gate to reach the new 60-point plateau.
The overhaul scraps the current system, which comprises a main ladder running from 17.5 to 50 points and a lower ladder for less profitable jurisdictions and practices, which runs from 10 to 30 points. A handful of partners in offices such as New York have also received above-lockstep deals.
While the changes mean that all partners will be joining the lockstep at a lower level and will take longer to reach the top, the value per point is understood to be about 20% higher, meaning the difference in pay between 17.5 points and 12 points will not be as big as under the current system.
Under the current system, a point is budgeted to be worth about £40,000 for the current financial year but this will be rebased to nearer £50,000, taking the 60-point top of the lockstep to about £3m, compared to about £2.2m for top earners at present.
Those at the top of the core 40-point plateau will make about £2m, based on current budgeted point values.
Partners will climb the ladder by the same number of points each year until the core ladder ends, at which point the increments are thought to get bigger.
Ninety one percent of partners voted on the new package, with 94% of them voting in favour of the changes.
Freshfields senior partner Edward Braham said: "We felt this was the right time to look closely at our lockstep. The partners have engaged, consulted and voted positively for the new structure, which now cements our model for the foreseeable future.
"We are an ambitious, confident and aligned partnership and we are in a very positive place to make the most of the many opportunities we have."
All partners will now see their positions on the lockstep reviewed ahead of the 1 May introduction of the new system.
Freshfields has been reviewing the performance of a number of its partners in recent years, with Legal Week reporting in January 2016 that many partners faced having their profit shares cut in a bid to ramp up profitability.
At that point, a number of partners in less profitable practices and offices moved down to the second tier lockstep ladder.
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