The merger between Clifford Chance and Punder Volhard Weber Axster will result in a 50 per cent pay rise for the German partners, The Lawyer can reveal.
Punders' profits per partner are understood to be around £400,000 – two-thirds of Clifford Chance partners' earnings. But once the merger is complete all profits will be split equally across the three merged firms, including US firm Rogers & Wells.
Rogers & Wells profits per partner were $760,000 (£500,000) last year.
Punders managing partner Peter Negele says that at the moment his firm has a “modified lockstep system”.
Between 89 and 90 per cent of profits are distributed through the system, which rewards partners according to seniority rather than the amount of money the partners bring in through deals.
The remaining 10 to 11 per cent is put into a bonus pool.
“At first we will have three pots,” says Negele. “And each pot will depend on the firm's relative contribution to profits. At the end of the transition period there will be one pot which we will all share.”
There will be a transition period of two years when Punders will stick to its existing renumeration system. Then all three parts of the new global firm will move to the Clifford Chance lockstep system. Insiders at Clifford Chance hope that the global merger will attract more business that will bump up profits per partner overall to compensate for the lower levels of profits from Punders and to a certain extent Rogers & Wells.
Freshfields will move into an immediate single partnership with Deringer Tessin Herrmann & Sedemund. A Freshfields spokeswoman says merger terms were finalised 18 months ago. The firm has been able to go straight into sharing all profits because Deringer's profits per partner are not far off the £555,000 brought in by Freshfields.