Berwin Leighton and Paisner face equity share headache

Berwin Leighton and Paisner & Co may be heading for a collision over merging the firms' disparate profit distribution systems.

The firms, which are in "exploratory talks" with a view to merger, follow different systems.

Paisners runs on an enhanced lockstep system, whereas Berwin Leighton lawyers take at least 11 years to reach plateau, while its partners are rewarded at the end of the year by a discretionary bonus distributed by the managing partner.

Paisners' lawyers are split into junior and senior equity partners as the firm does not have salaried partners.

While profit distribution at the junior level is comparatively small, once partners reach the senior stage they are assessed on five criteria, including business development and chargeable hours.

One source says that under the current system it takes senior partners between 8 and 10 years to reach plateau, but another reveals: "It's very complicated, and the top of equity is kept very tight. It's forever causing fights."

However, an insider says: "I'd say that a significant amount of partners within Berwin Leighton would support a more merit-based system. It would reflect the firm's entrepreneurial culture."

One source says that both firms will have to address fundamental questions of profit distribution as soon as possible.

Neville Eisenberg, managing partner at Berwin Leighton, says: "It's all a bit too early and I don't think we've started to look at that."

But another source says: "With two competing systems like that, it is going to be an issue."

Berwin Leighton has lost a number of significant partners, including former head of property David Taylor to Herbert Smith and head of international Daniel Rosenberg to Taylor Joynson Garrett.