From day one of the Herbert Smith Freehills (HSF) combination on 1 October 2012, the firm has always marketed itself as a fully merged firm with a single global profit pool. But the devil is in the details. If read more closely, “a single global profit pool” means that the two legacy firms will pool together their profits, and then divide the profits into two parts with each legacy partnership continuing to distribute its share of the total profits to partners through its existing system.
Not so much of a full financial integration in spirit or in practice. But all is about to change. HSF has finally voted through an aligned remuneration system by opting for a hybrid model of the two previous systems run by Freehills and Herbert Smith, creating a modified lockstep for HSF.
However, you can always count on the firm for its creativity when striking a deal. Even under an aligned system, the two legacy partnerships will have a few differences and unique components in their respective distribution method.
Although it is not as straightforward as its rival Ashurst, which has adopted the UK partnership’s managed lockstep for the fully merged firm, this is a significant and necessary step forward for HSF.
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