Bruckhaus Westrick Stegemann has voted to merge with Freshfields as it was revealed that the City giant agreed to change its lockstep structure.
News of the positive second vote came through as The Lawyer went to press and Freshfields will vote tomorrow (20 June).
Sources close to Bruckhaus confirmed that the profit-share issue was key in the delicate negotiations.
Freshfields has a 10-year lockstep and a spread of two to one, so partners of 10 years' standing or more earn double that of first-year entrants into the equity. Preliminary figures for the financial year 1999-2000 indicate record profits; first-year partners are on £400,000, rising to £800,000 at the plateau level.
But to bridge the politically delicate gap between UK and German market practice, Freshfields is planning to stretch its lockstep to bring it further into line with Bruckhaus's model. The merged firms will pool profits, but will operate different distributions.
The Freshfields share-out will move from a 2:1 spread over 10 years to 2.5:1 over 12 years. Bruckhaus operates a spread of 3.5:1, with plateau partners at Bruckhaus understood to earn broadly the same as those at Freshfields.
A junior Bruckhaus partner will therefore enter the equity on a lower level, but will reach parity with their Freshfields counterpart after five years. This compromise takes account of market norms in Germany, where associates are promoted to partner after fewer years in practice.
The profit share-out was key to the agreement, say sources close to both firms. But this is not the only concession that Freshfields has made in order to entice the top-rank German firm; Bruckhaus partner Christian Wilde will step up to become joint senior partner of the projected merged entity, with Anthony Salz.
Freshfields declined to comment.
Friday's vote was the second time that partners at Bruckhaus has voted on the merger.
Two months ago, two thirds of Bruckhaus partners voted in favour – well short of the necessary majority for merger, which is understood to be nearly 100 per cent (The Lawyer, 24 April).
It will be Freshfields' second German alliance after its link-up with Deringer Tessin Herrmann & Sedemund last year.