Bond Pearce is overhauling its lockstep in a drive to increase its competitive edge by adding a merit-based element, as the firm reports a 15 per cent drop in profit per equity partner (PEP).
The new remuneration system will take effect from April 2007 for the 2007-08 financial year and replaces the firm's more traditional lockstep method of compensating partners.
Managing partner Victor Tettmar told The Lawyer: "The lockstep has served us well but we're changing to a modified lockstep, which will be new for us. The change is about making ourselves more competitive and motivating partners."
Bond Pearce operates a straight seven-year lockstep, which runs from 680 to 1,000 points. Equity spread for the 2005-06 year was £133,000-£205,000. It has both equity and fixed-shared partners, with the former accounting for 56 per cent of the partnership.
The new system will combine a shorter lockstep with part of the compensation package, based on performance. The firm will also introduce 'super plateau' positions.
In line with many other litigation-heavy firms, Bond Pearce posted disappointing results for the 2005-06 financial year. PEP dropped by 15 per cent to £180,000 from £213,000, while fee income rose just a fraction to £41.1m from £40.1m. Litigation accounts for 52 per cent of the firm's turnover.
Despite this year's results, Tettmar is confident about the future. "We need to bounce back and regain our profitability, and the indications are good," he said. "We've had a number of good client wins and all areas of the practice are seeing growth."