Ashursts, Fried Frank: the final countdown

Ashurst Morris Crisp and Fried Frank Harris Shriver & Jacobson are nearing a conclusion to their merger talks, with only one hurdle left in the way - remuneration.

The Lawyer understands that the two firms are in the throes of agreeing on a scheme that could see Ashursts give up its treasured pure lockstep system in favour of a merit-based scale akin to that of Fried Frank.

Sources close to the firms have told The Lawyer that the issue is "under active discussion" at the moment, with a resolution expected very soon.

It is not yet clear whether the firms will reach an agreement by Christmas, although sources say that in September a deadline was set, certainly within Fried Frank, to make a decision whether or not to go forward with a merger by December.

It is understood that the firms are examining a couple of solutions to the tricky problem of pay, although at the moment it appears as if Ashursts will have to bend to Fried Frank's system.

Around 90 per cent of Fried Frank's partners are paid out on lockstep, which tops 400 points. The other 10 per cent of the partnership are rewarded through a 'super-point' system, in which the largest billers are on either 500 points or, at the highest reaches of the firm, 825 points.

If Ashursts was to adopt Fried Frank's scheme, it would be forced to go through the potentially deal-breaking ordeal of deciding which of its partners would be in the 'super-point' camp.

In the past, Ashursts has not been totally averse to adopting a merit-based system. It is understood that, during its talks with Latham & Watkins nearly two years ago, the UK firm seriously considered a scheme where partners were paid on lockstep, which at the US practice takes between eight and 10 years to ascend.

However, the sticking point was the 15 per cent of profits which Lathams puts into a discretionary bonus pool. Ashursts was understood to want a strict set of criteria under which the pool would be divvied up.

Geoffrey Green, senior partner at Ashursts, said: "We've discussed compensation with Fried Frank as well as a number of US firms, whether we're in merger talks or not."

Fried Frank declined to comment.