Squire Sanders and Washington DC-based Patton Boggs have agreed to a wholly merit-based remuneration structure once the two firms merge on 1 June.
The decision was made at the start of the merger discussions after Patton Boggs conducted a strategic review of its compensation structure and decided to abolish its traditional ’eat-what-you-kill’ model.
Patton Boggs managing partner Edward Newberry told The Lawyer that the review was part of the firm’s “five-year strategic plan” and followed a partnership vote of 95 per cent in favour of the remuneration change. He insisted the move was not related to the merger, adding, “as it happens, [it] is very close to that of the Squire Sanders system currently in place”.
The move means there will be no changes to the Squire Sanders side of the business once the merged firm becomes Squire Patton Boggs on 1 June.
Squire Sanders European managing partner Peter Crossley said: ”In any combination it’s a good idea to deal with the tough issues right at the start. If you don’t deal with these up front, you’ll get into trouble later on. The way a firm rewards its partners says a lot about its culture, and we discussed and agreed compensation and profit sharing at the outset.
“[In] the combined firm we will be adopting the existing Squire Sanders compensation/remuneration system. It will continue to be a wholly merit-based system, determined by our global board, which will include a discretionary bonus system.”
Newberry added: “The transfer of our partnership to the Squire Sanders compensation system should be relatively seamless as we’ve already adopted a similar, industry best practices, system ourselves.”
When asked what impact the merger would have on Squire Sanders offices in the UK, Crossley said there would be no redundancies as a result of the combination.
Patton Boggs and Squire Sanders started talking in February. The combined firm will have 1,700 lawyers in 45 offices across 22 countries. Patton Boggs is hoping it will provide the international platform its clients are increasingly demanding while the merger should give Squire Sanders a boost in Washington DC.
The merger vote took place last week (24 May) but was reportedly delayed due to a complication in Patton Boggs’ legal battle with oil giant Chevron. Patton Boggs handed over $15m to Chevron to settle the case and also issued a statement of regret two weeks ago (12 May 2014).
The firm had been looking for a merger partner for a number of months while facing the multi-million dollar legal battle and also announcing 65 layoffs in March last year. It had initially targeted Texas-based Locke Lord, though those talks fell through in December (20 December 2013).