Many explanations have been mooted for the partner haemorrhage at Denton Wilde Sapte (DWS). One factor common to the defections of the high-billing media/IP team was dissatisfaction with the merit-orientated remuneration system. The firm is now embarking on a wholesale review of the system, albeit as part of what managing partner Howard Morris calls a “holistic” examination of all aspects of partnership.
It couldn’t have come at a better time, because the firm can’t afford to operate a remuneration system that alienates its highest-billing partners.
The problem, claim disaffected sources, is that the system is skewed too heavily in favour of partners in management and administrative roles. DWS’s system rewards partners according to their place on a lockstep, but also retains 25 per cent of firmwide profits to fund a bonus pool. Given current profitability, that bonus is uppermost in partners’ minds.
The complaint is that points are awarded equally for fee-earning and for ‘investment’ activities, which could be anything from developing international links to knowhow to firm management. However, full-time managers, while not expected to do any fee-earning, are given a large allocation of fee-earning points if they meet their management targets. Consequently, many have been paid more than star partners such as Nigel West and Adrian Mecz, who have now quit.
As Morris rightly says, you need to attract good people into management, and if you want to do that, you can’t ask them to take a pay cut. Many other large firms (Clifford Chance springs to mind) have had the same tensions between management and fee-earners. But something has gone seriously awry at DWS.
Morris has made some moves to tackle the problem. A key complaint was that the remuneration committee was dominated by Virginia Glastonbury and Rory McAlpine, who were both in management. Morris’s election manifesto promised that he would not sit on the remuneration committee, which may go some way to dispelling what a former partner called the “Alice in Wonderland” decision-making process.
There is no set timescale for the review, which will look at much broader issues. Morris has yet to produce a consultation framework, but it is thought that the review will extend to issues of retirement age and the circumstances under which partners can be shifted back down the lockstep.
Something must be done to stop the rot, but one positive is that Morris is widely held to be the right man for the job.