Top city firms are attempting to branch out into remuneration advice by acquiring independent consultancies.
Peter Brown, chairman of the consultancy Top Pay Research Group, which advises independent directors and companies on pay, said he had been approached by “a couple” of law firms to see whether his company would form a permanent alliance with them to offer a separate remuneration advice service.
The market for such advice has taken off since the publication of the Cadbury and Greenbury reports on corporate governance which called for directors to seek independent advice on remuneration that could be justifiable to shareholders.
He said that Clifford Chance's hived-off company, New Bridge Street, was already a major player in the remuneration advice market and other big City firms were looking to follow the same model.
Burke warned that for solicitors to directly advise remuneration committees on pay levels would not be appropriate.
Where there is a regular fee relationship with the company, the potential for conflict would always be there.
The temptation would be for the solicitor to recommend a higher salary simply to maintain the relationship.
A survey his company conducted together with 3i, of individuals who together hold over 1,400 directorships, found that 73 per cent of them thought that their remuneration committee should not take advice from firms which have a fee-based relationship such as auditors, consultants and lawyers.
Brown said he had particularly in mind the accountancy firms and actuaries who often do provide advice on pay levels to directors.
It is far less common for solicitors to do so.