Dewey unveils incentive scheme to stem partner exits

The firm - hit by 47 partner exits since the start of the year - is understood to be considering an option of paying out distributions to partners over a long period. Possible lengths of the deal cited include two years.

The plans are an initiative to keep partners for a long period of time following a mass of partner defections on the back of troubled finances.

The firm’s policy of bringing in star recruits on fixed remuneration deals is seen as one of the biggest factors leading to the firm’s decline, with close to 100 partners thought to have been on these guarantees at the start of 2012.

Despite the guarantees scheme, which was intended to attract and keep rainmakers, the firm has found itself deep in debt and unable to hold on to key teams.

One former partner said: “Sure, you’ve got to take care of the superstars, but then they’re losing superstars.”

The Lawyer revealed this week that Dewey had slashed the profit share received immediately by the five members of the new office of the chairman, with the five partners receiving promissory notes to receive at least part of the remainder in 2014 (2 April 2012).

The quintet of partners have agreed to cap their annual profit shares at $2.5m (£1.6m), a large reduction on the figure of up to $6m (£3.8m) per year to which they were understood to be contracted.

At the same time, the firm is renegotiating guarantees with partners who joined on fixed deals before 2011, but 2011 hires have been assured that their deals are not going to change.

The biggest mass partner exit in the spate of defections was a 12-partner walkout to Willkie Farr & Gallagher last month (19 March 2012).